Correlation Between Ducgiang Chemicals and Nam Kim
Can any of the company-specific risk be diversified away by investing in both Ducgiang Chemicals 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 Ducgiang Chemicals and Nam Kim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ducgiang Chemicals Detergent and Nam Kim Steel, you can compare the effects of market volatilities on Ducgiang Chemicals 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 Ducgiang Chemicals with a short position of Nam Kim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ducgiang Chemicals and Nam Kim.
Diversification Opportunities for Ducgiang Chemicals and Nam Kim
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ducgiang and Nam is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ducgiang Chemicals Detergent 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 Ducgiang Chemicals 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 Ducgiang Chemicals Detergent 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 Ducgiang Chemicals i.e., Ducgiang Chemicals and Nam Kim go up and down completely randomly.
Pair Corralation between Ducgiang Chemicals and Nam Kim
Assuming the 90 days trading horizon Ducgiang Chemicals Detergent is expected to generate 1.14 times more return on investment than Nam Kim. However, Ducgiang Chemicals is 1.14 times more volatile than Nam Kim Steel. It trades about 0.14 of its potential returns per unit of risk. Nam Kim Steel is currently generating about -0.17 per unit of risk. If you would invest 10,756,600 in Ducgiang Chemicals Detergent on August 29, 2024 and sell it today you would earn a total of 593,400 from holding Ducgiang Chemicals Detergent or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ducgiang Chemicals Detergent vs. Nam Kim Steel
Performance |
| Timeline |
| Ducgiang Chemicals |
| Nam Kim Steel |
Ducgiang Chemicals and Nam Kim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ducgiang Chemicals and Nam Kim
The main advantage of trading using opposite Ducgiang Chemicals and Nam Kim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ducgiang Chemicals 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.| Ducgiang Chemicals vs. FIT INVEST JSC | Ducgiang Chemicals vs. Damsan JSC | Ducgiang Chemicals vs. An Phat Plastic | Ducgiang Chemicals vs. APG Securities Joint |
| Nam Kim vs. FIT INVEST JSC | Nam Kim vs. Damsan JSC | Nam Kim vs. An Phat Plastic | Nam Kim vs. APG Securities Joint |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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