Correlation Between Namhwa Industrial and Daishin Information

Can any of the company-specific risk be diversified away by investing in both Namhwa Industrial and Daishin Information at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Namhwa Industrial and Daishin Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Namhwa Industrial Co and Daishin Information Communications, you can compare the effects of market volatilities on Namhwa Industrial and Daishin Information and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Namhwa Industrial with a short position of Daishin Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhwa Industrial and Daishin Information.

Diversification Opportunities for Namhwa Industrial and Daishin Information

-0.53

Correlation Coefficient

Namhwa Industrial  Daishin Information

Excellent diversification

The 3 months correlation between Namhwa and Daishin is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Namhwa Industrial Co and Daishin Information Communicat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daishin Information and Namhwa Industrial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Namhwa Industrial Co are associated (or correlated) with Daishin Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daishin Information has no effect on the direction of Namhwa Industrial i.e., Namhwa Industrial and Daishin Information go up and down completely randomly.

Pair Corralation between Namhwa Industrial and Daishin Information

Assuming the 90 days trading horizon Namhwa Industrial Co is expected to generate 1.27 times more return on investment than Daishin Information. However, Namhwa Industrial is 1.27 times more volatile than Daishin Information Communications. It trades about 0.1 of its potential returns per unit of risk. Daishin Information Communications is currently generating about -0.05 per unit of risk. If you would invest  482,000  in Namhwa Industrial Co on September 3, 2024 and sell it today you would earn a total of  42,000  from holding Namhwa Industrial Co or generate 8.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Namhwa Industrial Co  vs.  Daishin Information Communicat

Namhwa Industrial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Namhwa Industrial Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Namhwa Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Daishin Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daishin Information Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Daishin Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Namhwa Industrial and Daishin Information

The main advantage of trading using opposite Namhwa Industrial and Daishin Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhwa Industrial position performs unexpectedly, Daishin Information can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Daishin Information will offset losses from the drop in Daishin Information's long position.

The idea behind Namhwa Industrial Co and Daishin Information Communications pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.