Correlation Between Nam Kim and Hochiminh City
Can any of the company-specific risk be diversified away by investing in both Nam Kim and Hochiminh City 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 Hochiminh City 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 Hochiminh City Metal, you can compare the effects of market volatilities on Nam Kim and Hochiminh City 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 Hochiminh City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Kim and Hochiminh City.
Diversification Opportunities for Nam Kim and Hochiminh City
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nam and Hochiminh is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nam Kim Steel and Hochiminh City Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hochiminh City Metal 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 Hochiminh City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hochiminh City Metal has no effect on the direction of Nam Kim i.e., Nam Kim and Hochiminh City go up and down completely randomly.
Pair Corralation between Nam Kim and Hochiminh City
Assuming the 90 days trading horizon Nam Kim Steel is expected to under-perform the Hochiminh City. In addition to that, Nam Kim is 1.4 times more volatile than Hochiminh City Metal. It trades about -0.1 of its total potential returns per unit of risk. Hochiminh City Metal is currently generating about 0.03 per unit of volatility. If you would invest 1,107,576 in Hochiminh City Metal on October 12, 2024 and sell it today you would earn a total of 92,424 from holding Hochiminh City Metal or generate 8.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nam Kim Steel vs. Hochiminh City Metal
Performance |
| Timeline |
| Nam Kim Steel |
| Hochiminh City Metal |
Nam Kim and Hochiminh City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Kim and Hochiminh City
The main advantage of trading using opposite Nam Kim and Hochiminh City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Kim position performs unexpectedly, Hochiminh City 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 Hochiminh City will offset losses from the drop in Hochiminh City'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 |
| Hochiminh City vs. Petrolimex Information Technology | Hochiminh City vs. Vnsteel Vicasa JSC | Hochiminh City vs. Ducgiang Chemicals Detergent | Hochiminh City vs. Nam Kim Steel |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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