Correlation Between Construction and Nam Kim
Can any of the company-specific risk be diversified away by investing in both Construction 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 Construction and Nam Kim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Construction And Investment and Nam Kim Steel, you can compare the effects of market volatilities on Construction 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 Construction with a short position of Nam Kim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Construction and Nam Kim.
Diversification Opportunities for Construction and Nam Kim
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Construction and Nam is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Construction And Investment 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 Construction 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 Construction And Investment 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 Construction i.e., Construction and Nam Kim go up and down completely randomly.
Pair Corralation between Construction and Nam Kim
Assuming the 90 days trading horizon Construction And Investment is expected to generate 0.7 times more return on investment than Nam Kim. However, Construction And Investment is 1.43 times less risky than Nam Kim. It trades about 0.02 of its potential returns per unit of risk. Nam Kim Steel is currently generating about -0.16 per unit of risk. If you would invest 3,788,698 in Construction And Investment on October 13, 2024 and sell it today you would earn a total of 141,302 from holding Construction And Investment or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Construction And Investment vs. Nam Kim Steel
Performance |
| Timeline |
| Construction And Inv |
| Nam Kim Steel |
Construction and Nam Kim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Construction and Nam Kim
The main advantage of trading using opposite Construction and Nam Kim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Construction 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.| Construction vs. DOMESCO Medical Import | Construction vs. Elcom Technology Communications | Construction vs. Nam Kim Steel | Construction vs. Mobile World 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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