Correlation Between Nam Kim and Ba Ria
Can any of the company-specific risk be diversified away by investing in both Nam Kim and Ba Ria 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 Nam Kim and Ba Ria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nam Kim Steel and Ba Ria Thermal, you can compare the effects of market volatilities on Nam Kim and Ba Ria 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 Nam Kim with a short position of Ba Ria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Kim and Ba Ria.
Diversification Opportunities for Nam Kim and Ba Ria
Poor diversification
The 3 months correlation between Nam and BTP is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nam Kim Steel and Ba Ria Thermal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ba Ria Thermal and Nam Kim 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 Nam Kim Steel are associated (or correlated) with Ba Ria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ba Ria Thermal has no effect on the direction of Nam Kim i.e., Nam Kim and Ba Ria go up and down completely randomly.
Pair Corralation between Nam Kim and Ba Ria
Assuming the 90 days trading horizon Nam Kim Steel is expected to generate 2.14 times more return on investment than Ba Ria. However, Nam Kim is 2.14 times more volatile than Ba Ria Thermal. It trades about -0.17 of its potential returns per unit of risk. Ba Ria Thermal is currently generating about -0.63 per unit of risk. If you would invest 2,070,000 in Nam Kim Steel on August 29, 2024 and sell it today you would lose (125,000) from holding Nam Kim Steel or give up 6.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nam Kim Steel vs. Ba Ria Thermal
Performance |
| Timeline |
| Nam Kim Steel |
| Ba Ria Thermal |
Nam Kim and Ba Ria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Kim and Ba Ria
The main advantage of trading using opposite Nam Kim and Ba Ria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Kim position performs unexpectedly, Ba Ria 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 Ba Ria will offset losses from the drop in Ba Ria's long position.| Nam Kim vs. FIT INVEST JSC | Nam Kim vs. Damsan JSC | Nam Kim vs. An Phat Plastic | Nam Kim vs. APG Securities Joint |
| Ba Ria vs. FIT INVEST JSC | Ba Ria vs. Damsan JSC | Ba Ria vs. An Phat Plastic | Ba Ria 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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