Correlation Between Design and NH Investment
Can any of the company-specific risk be diversified away by investing in both Design and NH Investment 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 Design and NH Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Design Co and NH Investment Securities, you can compare the effects of market volatilities on Design and NH Investment 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 Design with a short position of NH Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Design and NH Investment.
Diversification Opportunities for Design and NH Investment
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Design and 005940 is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Design Co and NH Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Investment Securities and Design 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 Design Co are associated (or correlated) with NH Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Investment Securities has no effect on the direction of Design i.e., Design and NH Investment go up and down completely randomly.
Pair Corralation between Design and NH Investment
Assuming the 90 days trading horizon Design Co is expected to under-perform the NH Investment. In addition to that, Design is 3.32 times more volatile than NH Investment Securities. It trades about -0.33 of its total potential returns per unit of risk. NH Investment Securities is currently generating about 0.15 per unit of volatility. If you would invest 1,338,000 in NH Investment Securities on September 25, 2024 and sell it today you would earn a total of 87,000 from holding NH Investment Securities or generate 6.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Design Co vs. NH Investment Securities
Performance |
Timeline |
Design |
NH Investment Securities |
Design and NH Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Design and NH Investment
The main advantage of trading using opposite Design and NH Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Design position performs unexpectedly, NH Investment 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 NH Investment will offset losses from the drop in NH Investment's long position.The idea behind Design Co and NH Investment Securities 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.NH Investment vs. AptaBio Therapeutics | NH Investment vs. Wonbang Tech Co | NH Investment vs. Busan Industrial Co | NH Investment vs. Busan Ind |
Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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