Correlation Between Tienlen Steel and Nafoods Group
Can any of the company-specific risk be diversified away by investing in both Tienlen Steel and Nafoods Group 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 Tienlen Steel and Nafoods Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tienlen Steel Corp and Nafoods Group JSC, you can compare the effects of market volatilities on Tienlen Steel and Nafoods Group 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 Tienlen Steel with a short position of Nafoods Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tienlen Steel and Nafoods Group.
Diversification Opportunities for Tienlen Steel and Nafoods Group
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Tienlen and Nafoods is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Tienlen Steel Corp and Nafoods Group JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nafoods Group JSC and Tienlen Steel 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 Tienlen Steel Corp are associated (or correlated) with Nafoods Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nafoods Group JSC has no effect on the direction of Tienlen Steel i.e., Tienlen Steel and Nafoods Group go up and down completely randomly.
Pair Corralation between Tienlen Steel and Nafoods Group
Assuming the 90 days trading horizon Tienlen Steel Corp is expected to under-perform the Nafoods Group. But the stock apears to be less risky and, when comparing its historical volatility, Tienlen Steel Corp is 1.63 times less risky than Nafoods Group. The stock trades about -0.4 of its potential returns per unit of risk. The Nafoods Group JSC is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2,070,000 in Nafoods Group JSC on September 1, 2024 and sell it today you would lose (55,000) from holding Nafoods Group JSC or give up 2.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tienlen Steel Corp vs. Nafoods Group JSC
Performance |
| Timeline |
| Tienlen Steel Corp |
| Nafoods Group JSC |
Tienlen Steel and Nafoods Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tienlen Steel and Nafoods Group
The main advantage of trading using opposite Tienlen Steel and Nafoods Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tienlen Steel position performs unexpectedly, Nafoods Group 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 Nafoods Group will offset losses from the drop in Nafoods Group's long position.| Tienlen Steel vs. Mobile World Investment | Tienlen Steel vs. Petrolimex Information Technology | Tienlen Steel vs. Century Synthetic Fiber | Tienlen Steel vs. Elcom Technology Communications |
| Nafoods Group vs. FIT INVEST JSC | Nafoods Group vs. Damsan JSC | Nafoods Group vs. An Phat Plastic | Nafoods Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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