Correlation Between Nam Kim and PV2 Investment
Can any of the company-specific risk be diversified away by investing in both Nam Kim and PV2 Investment 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 PV2 Investment 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 PV2 Investment JSC, you can compare the effects of market volatilities on Nam Kim and PV2 Investment 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 PV2 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Kim and PV2 Investment.
Diversification Opportunities for Nam Kim and PV2 Investment
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nam and PV2 is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Nam Kim Steel and PV2 Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PV2 Investment JSC 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 PV2 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PV2 Investment JSC has no effect on the direction of Nam Kim i.e., Nam Kim and PV2 Investment go up and down completely randomly.
Pair Corralation between Nam Kim and PV2 Investment
Assuming the 90 days trading horizon Nam Kim is expected to generate 13.69 times less return on investment than PV2 Investment. But when comparing it to its historical volatility, Nam Kim Steel is 2.93 times less risky than PV2 Investment. It trades about 0.08 of its potential returns per unit of risk. PV2 Investment JSC is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 280,000 in PV2 Investment JSC on November 7, 2024 and sell it today you would earn a total of 120,000 from holding PV2 Investment JSC or generate 42.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nam Kim Steel vs. PV2 Investment JSC
Performance |
| Timeline |
| Nam Kim Steel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| PV2 Investment JSC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Nam Kim and PV2 Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Kim and PV2 Investment
The main advantage of trading using opposite Nam Kim and PV2 Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Kim position performs unexpectedly, PV2 Investment 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 PV2 Investment will offset losses from the drop in PV2 Investment's long position.The idea behind Nam Kim Steel and PV2 Investment JSC 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.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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