Correlation Between Investment and Nam Kim

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

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

Diversification Opportunities for Investment and Nam Kim

0.7

Correlation Coefficient

Investment  Nam Kim

Poor diversification

The 3 months correlation between Investment and Nam is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Investment and Industrial 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 Investment 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 Investment and Industrial 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 Investment i.e., Investment and Nam Kim go up and down completely randomly.

Pair Corralation between Investment and Nam Kim

Assuming the 90 days trading horizon Investment and Industrial is expected to generate 0.76 times more return on investment than Nam Kim. However, Investment and Industrial is 1.31 times less risky than Nam Kim. It trades about 0.16 of its potential returns per unit of risk. Nam Kim Steel is currently generating about 0.05 per unit of risk. If you would invest  6,790,000  in Investment and Industrial on December 23, 2024 and sell it today you would earn a total of  1,080,000  from holding Investment and Industrial or generate 15.91% return on investment over 90 days.

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

Investment and Industrial  vs.  Nam Kim Steel

Investment and Industrial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Investment and Industrial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Nam Kim Steel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nam Kim Steel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Nam Kim may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Investment and Nam Kim

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

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.