Correlation Between Vien Dong and Nam Kim
Can any of the company-specific risk be diversified away by investing in both Vien Dong and Nam Kim 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 Vien Dong and Nam Kim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vien Dong Investment and Nam Kim Steel, you can compare the effects of market volatilities on Vien Dong and Nam Kim 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 Vien Dong with a short position of Nam Kim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vien Dong and Nam Kim.
Diversification Opportunities for Vien Dong and Nam Kim
Poor diversification
The 3 months correlation between Vien and Nam is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vien Dong Investment and Nam Kim Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nam Kim Steel and Vien Dong 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 Vien Dong Investment are associated (or correlated) with Nam Kim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nam Kim Steel has no effect on the direction of Vien Dong i.e., Vien Dong and Nam Kim go up and down completely randomly.
Pair Corralation between Vien Dong and Nam Kim
Assuming the 90 days trading horizon Vien Dong Investment is expected to under-perform the Nam Kim. In addition to that, Vien Dong is 1.06 times more volatile than Nam Kim Steel. It trades about -0.23 of its total potential returns per unit of risk. Nam Kim Steel is currently generating about -0.2 per unit of volatility. If you would invest 2,095,000 in Nam Kim Steel on September 2, 2024 and sell it today you would lose (150,000) from holding Nam Kim Steel or give up 7.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vien Dong Investment vs. Nam Kim Steel
Performance |
| Timeline |
| Vien Dong Investment |
| Nam Kim Steel |
Vien Dong and Nam Kim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vien Dong and Nam Kim
The main advantage of trading using opposite Vien Dong and Nam Kim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vien Dong position performs unexpectedly, Nam Kim 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 Nam Kim will offset losses from the drop in Nam Kim's long position.| Vien Dong vs. Danang Rubber JSC | Vien Dong vs. Post and Telecommunications | Vien Dong vs. Vietnam Rubber Group | Vien Dong vs. Investment and Industrial |
| Nam Kim vs. Ha Noi Education | Nam Kim vs. Tien Giang Investment | Nam Kim vs. Post and Telecommunications | Nam Kim vs. Vien Dong 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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