Correlation Between Vnsteel Vicasa and Nam Kim

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

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

Diversification Opportunities for Vnsteel Vicasa and Nam Kim

-0.68

Correlation Coefficient

Vnsteel Vicasa  Nam Kim

Excellent diversification

The 3 months correlation between Vnsteel and Nam is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Vnsteel Vicasa JSC 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 Vnsteel Vicasa 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 Vnsteel Vicasa JSC 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 Vnsteel Vicasa i.e., Vnsteel Vicasa and Nam Kim go up and down completely randomly.

Pair Corralation between Vnsteel Vicasa and Nam Kim

Assuming the 90 days trading horizon Vnsteel Vicasa JSC is expected to generate 1.75 times more return on investment than Nam Kim. However, Vnsteel Vicasa is 1.75 times more volatile than Nam Kim Steel. It trades about 0.19 of its potential returns per unit of risk. Nam Kim Steel is currently generating about -0.22 per unit of risk. If you would invest  872,000  in Vnsteel Vicasa JSC on September 29, 2024 and sell it today you would earn a total of  348,000  from holding Vnsteel Vicasa JSC or generate 39.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	66.15%
Values	Daily Returns

Vnsteel Vicasa JSC  vs.  Nam Kim Steel

Vnsteel Vicasa JSC

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vnsteel Vicasa JSC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vnsteel Vicasa displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Vnsteel Vicasa and Nam Kim

The main advantage of trading using opposite Vnsteel Vicasa and Nam Kim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vnsteel Vicasa 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 Vnsteel Vicasa JSC 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.