Correlation Between Danang Rubber and Nam Kim
Can any of the company-specific risk be diversified away by investing in both Danang Rubber 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 Danang Rubber and Nam Kim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danang Rubber JSC and Nam Kim Steel, you can compare the effects of market volatilities on Danang Rubber 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 Danang Rubber with a short position of Nam Kim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danang Rubber and Nam Kim.
Diversification Opportunities for Danang Rubber and Nam Kim
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Danang and Nam is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Danang Rubber 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 Danang Rubber 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 Danang Rubber 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 Danang Rubber i.e., Danang Rubber and Nam Kim go up and down completely randomly.
Pair Corralation between Danang Rubber and Nam Kim
Assuming the 90 days trading horizon Danang Rubber JSC is expected to under-perform the Nam Kim. But the stock apears to be less risky and, when comparing its historical volatility, Danang Rubber JSC is 2.14 times less risky than Nam Kim. The stock trades about -0.23 of its potential returns per unit of risk. The Nam Kim Steel is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,470,000 in Nam Kim Steel on December 21, 2024 and sell it today you would earn a total of 75,000 from holding Nam Kim Steel or generate 5.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Danang Rubber JSC vs. Nam Kim Steel
Performance |
Timeline |
Danang Rubber JSC |
Nam Kim Steel |
Danang Rubber and Nam Kim Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Danang Rubber and Nam Kim
The main advantage of trading using opposite Danang Rubber and Nam Kim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danang Rubber 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.Danang Rubber vs. Tri Viet Management | Danang Rubber vs. Pacific Petroleum Transportation | Danang Rubber vs. Nam Kim Steel | Danang Rubber vs. Pha Lai Thermal |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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