Correlation Between CEO Group and Nam Kim

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

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

Diversification Opportunities for CEO Group and Nam Kim

0.84

Correlation Coefficient

CEO Group  Nam Kim

Very poor diversification

The 3 months correlation between CEO and Nam is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CEO Group 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 CEO Group 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 CEO Group 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 CEO Group i.e., CEO Group and Nam Kim go up and down completely randomly.

Pair Corralation between CEO Group and Nam Kim

Assuming the 90 days trading horizon CEO Group JSC is expected to generate 1.06 times more return on investment than Nam Kim. However, CEO Group is 1.06 times more volatile than Nam Kim Steel. It trades about 0.11 of its potential returns per unit of risk. Nam Kim Steel is currently generating about 0.03 per unit of risk. If you would invest  1,370,000  in CEO Group JSC on December 20, 2024 and sell it today you would earn a total of  190,000  from holding CEO Group JSC or generate 13.87% return on investment over 90 days.

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

CEO Group JSC  vs.  Nam Kim Steel

CEO Group JSC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CEO Group JSC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CEO Group 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 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Nam Kim is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CEO Group and Nam Kim

The main advantage of trading using opposite CEO Group and Nam Kim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEO Group 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 CEO Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.