Correlation Between Nam Kim and Fecon Mining

Can any of the company-specific risk be diversified away by investing in both Nam Kim and Fecon Mining 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 Fecon Mining 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 Fecon Mining JSC, you can compare the effects of market volatilities on Nam Kim and Fecon Mining 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 Fecon Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Kim and Fecon Mining.

Diversification Opportunities for Nam Kim and Fecon Mining

0.2

Correlation Coefficient

Nam Kim  Fecon Mining

Modest diversification

The 3 months correlation between Nam and Fecon is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nam Kim Steel and Fecon Mining JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fecon Mining JSC 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 Fecon Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fecon Mining JSC has no effect on the direction of Nam Kim i.e., Nam Kim and Fecon Mining go up and down completely randomly.

Pair Corralation between Nam Kim and Fecon Mining

Assuming the 90 days trading horizon Nam Kim Steel is expected to generate 1.29 times more return on investment than Fecon Mining. However, Nam Kim is 1.29 times more volatile than Fecon Mining JSC. It trades about 0.02 of its potential returns per unit of risk. Fecon Mining JSC is currently generating about 0.0 per unit of risk. If you would invest  1,315,000  in Nam Kim Steel on September 29, 2024 and sell it today you would earn a total of  145,000  from holding Nam Kim Steel or generate 11.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nam Kim Steel  vs.  Fecon Mining JSC

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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Fecon Mining JSC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fecon Mining JSC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Fecon Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nam Kim and Fecon Mining

The main advantage of trading using opposite Nam Kim and Fecon Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nam Kim position performs unexpectedly, Fecon Mining 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 Fecon Mining will offset losses from the drop in Fecon Mining's long position.

The idea behind Nam Kim Steel and Fecon Mining JSC 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.