Correlation Between KIM GROWTH and SSIAM VNFIN

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

By analyzing existing cross correlation between KIM GROWTH VN30 and SSIAM VNFIN LEAD, you can compare the effects of market volatilities on KIM GROWTH and SSIAM VNFIN 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 KIM GROWTH with a short position of SSIAM VNFIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIM GROWTH and SSIAM VNFIN.

Diversification Opportunities for KIM GROWTH and SSIAM VNFIN

0.55

Correlation Coefficient

KIM GROWTH  SSIAM VNFIN

Very weak diversification

The 3 months correlation between KIM and SSIAM is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding KIM GROWTH VN30 and SSIAM VNFIN LEAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSIAM VNFIN LEAD and KIM GROWTH 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 KIM GROWTH VN30 are associated (or correlated) with SSIAM VNFIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSIAM VNFIN LEAD has no effect on the direction of KIM GROWTH i.e., KIM GROWTH and SSIAM VNFIN go up and down completely randomly.

Pair Corralation between KIM GROWTH and SSIAM VNFIN

Assuming the 90 days trading horizon KIM GROWTH VN30 is expected to under-perform the SSIAM VNFIN. But the etf apears to be less risky and, when comparing its historical volatility, KIM GROWTH VN30 is 1.12 times less risky than SSIAM VNFIN. The etf trades about -0.02 of its potential returns per unit of risk. The SSIAM VNFIN LEAD is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,160,000  in SSIAM VNFIN LEAD on October 25, 2024 and sell it today you would lose (30,000) from holding SSIAM VNFIN LEAD or give up 1.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.06%
Values	Daily Returns

KIM GROWTH VN30  vs.  SSIAM VNFIN LEAD

KIM GROWTH VN30

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KIM GROWTH VN30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, KIM GROWTH is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

SSIAM VNFIN LEAD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSIAM VNFIN LEAD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SSIAM VNFIN is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KIM GROWTH and SSIAM VNFIN

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

The idea behind KIM GROWTH VN30 and SSIAM VNFIN LEAD 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.