Correlation Between KIM GROWTH and Vietnam Medicinal

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Can any of the company-specific risk be diversified away by investing in both KIM GROWTH and Vietnam Medicinal 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 KIM GROWTH and Vietnam Medicinal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KIM GROWTH VN and Vietnam Medicinal Materials, you can compare the effects of market volatilities on KIM GROWTH and Vietnam Medicinal 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 KIM GROWTH with a short position of Vietnam Medicinal. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIM GROWTH and Vietnam Medicinal.

Diversification Opportunities for KIM GROWTH and Vietnam Medicinal

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between KIM and Vietnam is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding KIM GROWTH VN and Vietnam Medicinal Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Medicinal and KIM GROWTH 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 KIM GROWTH VN are associated (or correlated) with Vietnam Medicinal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Medicinal has no effect on the direction of KIM GROWTH i.e., KIM GROWTH and Vietnam Medicinal go up and down completely randomly.

Pair Corralation between KIM GROWTH and Vietnam Medicinal

Assuming the 90 days trading horizon KIM GROWTH VN is expected to generate 0.62 times more return on investment than Vietnam Medicinal. However, KIM GROWTH VN is 1.62 times less risky than Vietnam Medicinal. It trades about -0.22 of its potential returns per unit of risk. Vietnam Medicinal Materials is currently generating about -0.25 per unit of risk. If you would invest  1,235,000  in KIM GROWTH VN on September 3, 2024 and sell it today you would lose (34,000) from holding KIM GROWTH VN or give up 2.75% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy55.0%
ValuesDaily Returns

KIM GROWTH VN  vs.  Vietnam Medicinal Materials

 Performance 
       Timeline  
KIM GROWTH VN 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days KIM GROWTH VN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, KIM GROWTH is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Vietnam Medicinal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Vietnam Medicinal Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

KIM GROWTH and Vietnam Medicinal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KIM GROWTH and Vietnam Medicinal

The main advantage of trading using opposite KIM GROWTH and Vietnam Medicinal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIM GROWTH position performs unexpectedly, Vietnam Medicinal 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 Vietnam Medicinal will offset losses from the drop in Vietnam Medicinal's long position.
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The idea behind KIM GROWTH VN and Vietnam Medicinal Materials 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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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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