Correlation Between Bao Ngoc and Nam Kim

Can any of the company-specific risk be diversified away by investing in both Bao Ngoc 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 Bao Ngoc and Nam Kim into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bao Ngoc Investment and Nam Kim Steel, you can compare the effects of market volatilities on Bao Ngoc 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 Bao Ngoc with a short position of Nam Kim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bao Ngoc and Nam Kim.

Diversification Opportunities for Bao Ngoc and Nam Kim

-0.03

Correlation Coefficient

Bao Ngoc  Nam Kim

Good diversification

The 3 months correlation between Bao and Nam is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bao Ngoc 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 Bao Ngoc 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 Bao Ngoc 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 Bao Ngoc i.e., Bao Ngoc and Nam Kim go up and down completely randomly.

Pair Corralation between Bao Ngoc and Nam Kim

Assuming the 90 days trading horizon Bao Ngoc Investment is expected to generate 1.33 times more return on investment than Nam Kim. However, Bao Ngoc is 1.33 times more volatile than Nam Kim Steel. It trades about -0.01 of its potential returns per unit of risk. Nam Kim Steel is currently generating about -0.08 per unit of risk. If you would invest  984,000  in Bao Ngoc Investment on September 16, 2024 and sell it today you would lose (24,000) from holding Bao Ngoc Investment or give up 2.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bao Ngoc Investment  vs.  Nam Kim Steel

Bao Ngoc Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bao Ngoc Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Bao Ngoc is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Nam Kim Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nam Kim Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Bao Ngoc and Nam Kim

The main advantage of trading using opposite Bao Ngoc and Nam Kim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bao Ngoc 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.

The idea behind Bao Ngoc Investment and Nam Kim Steel 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.