Correlation Between Nam Kim and Van Dien
Can any of the company-specific risk be diversified away by investing in both Nam Kim and Van Dien 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 Van Dien 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 Van Dien Fused, you can compare the effects of market volatilities on Nam Kim and Van Dien 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 Van Dien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Kim and Van Dien.
Diversification Opportunities for Nam Kim and Van Dien
Good diversification
The 3 months correlation between Nam and Van is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nam Kim Steel and Van Dien Fused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Van Dien Fused 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 Van Dien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Van Dien Fused has no effect on the direction of Nam Kim i.e., Nam Kim and Van Dien go up and down completely randomly.
Pair Corralation between Nam Kim and Van Dien
Assuming the 90 days trading horizon Nam Kim Steel is expected to under-perform the Van Dien. But the stock apears to be less risky and, when comparing its historical volatility, Nam Kim Steel is 3.36 times less risky than Van Dien. The stock trades about -0.32 of its potential returns per unit of risk. The Van Dien Fused is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,400,000 in Van Dien Fused on October 13, 2024 and sell it today you would lose (75,000) from holding Van Dien Fused or give up 5.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
Nam Kim Steel vs. Van Dien Fused
Performance |
| Timeline |
| Nam Kim Steel |
| Van Dien Fused |
Nam Kim and Van Dien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Kim and Van Dien
The main advantage of trading using opposite Nam Kim and Van Dien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Kim position performs unexpectedly, Van Dien 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 Van Dien will offset losses from the drop in Van Dien's long position.| Nam Kim vs. Din Capital Investment | Nam Kim vs. Transimex Transportation JSC | Nam Kim vs. Construction And Investment | Nam Kim vs. PetroVietnam Transportation Corp |
| Van Dien vs. Hochiminh City Metal | Van Dien vs. Century Synthetic Fiber | Van Dien vs. Nam Kim Steel | Van Dien vs. BIDV Insurance Corp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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