Correlation Between Nam Kim and Investment

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

Diversification Opportunities for Nam Kim and Investment

0.53

Correlation Coefficient

Nam Kim  Investment

Very weak diversification

The 3 months correlation between Nam and Investment is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nam Kim Steel and Investment And Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment And Const 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment And Const has no effect on the direction of Nam Kim i.e., Nam Kim and Investment go up and down completely randomly.

Pair Corralation between Nam Kim and Investment

Assuming the 90 days trading horizon Nam Kim Steel is expected to under-perform the Investment. But the stock apears to be less risky and, when comparing its historical volatility, Nam Kim Steel is 1.75 times less risky than Investment. The stock trades about -0.22 of its potential returns per unit of risk. The Investment And Construction is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,150,000  in Investment And Construction on September 28, 2024 and sell it today you would lose (110,000) from holding Investment And Construction or give up 9.57% of portfolio value over 90 days.

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

Nam Kim Steel  vs.  Investment And Construction

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.

Investment And Const

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nam Kim and Investment

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

The idea behind Nam Kim Steel and Investment And Construction 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.