Correlation Between Binh Duong and Nam Kim
Can any of the company-specific risk be diversified away by investing in both Binh Duong and Nam Kim 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 Binh Duong and Nam Kim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binh Duong Construction and Nam Kim Steel, you can compare the effects of market volatilities on Binh Duong and Nam Kim 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 Binh Duong with a short position of Nam Kim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binh Duong and Nam Kim.
Diversification Opportunities for Binh Duong and Nam Kim
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Binh and Nam is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Binh Duong Construction and Nam Kim Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nam Kim Steel and Binh Duong 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 Binh Duong Construction are associated (or correlated) with Nam Kim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nam Kim Steel has no effect on the direction of Binh Duong i.e., Binh Duong and Nam Kim go up and down completely randomly.
Pair Corralation between Binh Duong and Nam Kim
Assuming the 90 days trading horizon Binh Duong Construction is expected to generate 0.86 times more return on investment than Nam Kim. However, Binh Duong Construction is 1.16 times less risky than Nam Kim. It trades about 0.21 of its potential returns per unit of risk. Nam Kim Steel is currently generating about -0.13 per unit of risk. If you would invest 580,000 in Binh Duong Construction on August 29, 2024 and sell it today you would earn a total of 102,000 from holding Binh Duong Construction or generate 17.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binh Duong Construction vs. Nam Kim Steel
Performance |
| Timeline |
| Binh Duong Construction |
| Nam Kim Steel |
Binh Duong and Nam Kim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binh Duong and Nam Kim
The main advantage of trading using opposite Binh Duong and Nam Kim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binh Duong position performs unexpectedly, Nam Kim 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 Nam Kim will offset losses from the drop in Nam Kim's long position.| Binh Duong vs. FIT INVEST JSC | Binh Duong vs. Damsan JSC | Binh Duong vs. An Phat Plastic | Binh Duong vs. Alphanam ME |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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