Correlation Between Nam Kim and Vietnam Dairy
Can any of the company-specific risk be diversified away by investing in both Nam Kim and Vietnam Dairy 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 Vietnam Dairy 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 Vietnam Dairy Products, you can compare the effects of market volatilities on Nam Kim and Vietnam Dairy 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 Vietnam Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Kim and Vietnam Dairy.
Diversification Opportunities for Nam Kim and Vietnam Dairy
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nam and Vietnam is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Nam Kim Steel and Vietnam Dairy Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Dairy Products 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 Vietnam Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Dairy Products has no effect on the direction of Nam Kim i.e., Nam Kim and Vietnam Dairy go up and down completely randomly.
Pair Corralation between Nam Kim and Vietnam Dairy
Assuming the 90 days trading horizon Nam Kim Steel is expected to under-perform the Vietnam Dairy. In addition to that, Nam Kim is 1.81 times more volatile than Vietnam Dairy Products. It trades about -0.03 of its total potential returns per unit of risk. Vietnam Dairy Products is currently generating about 0.0 per unit of volatility. If you would invest 6,615,678 in Vietnam Dairy Products on September 2, 2024 and sell it today you would lose (165,678) from holding Vietnam Dairy Products or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Nam Kim Steel vs. Vietnam Dairy Products
Performance |
| Timeline |
| Nam Kim Steel |
| Vietnam Dairy Products |
Nam Kim and Vietnam Dairy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nam Kim and Vietnam Dairy
The main advantage of trading using opposite Nam Kim and Vietnam Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Kim position performs unexpectedly, Vietnam Dairy 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 Vietnam Dairy will offset losses from the drop in Vietnam Dairy's long position.| Nam Kim vs. Ha Noi Education | Nam Kim vs. Tien Giang Investment | Nam Kim vs. Post and Telecommunications | Nam Kim vs. Vien Dong Investment |
| Vietnam Dairy vs. FIT INVEST JSC | Vietnam Dairy vs. Damsan JSC | Vietnam Dairy vs. An Phat Plastic | Vietnam Dairy vs. Alphanam ME |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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