Correlation Between Nam Kim and CEO Group

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

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

Diversification Opportunities for Nam Kim and CEO Group

0.84

Correlation Coefficient

Nam Kim  CEO Group

Very poor diversification

The 3 months correlation between Nam and CEO is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Nam Kim Steel and CEO Group JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEO Group JSC and Nam Kim 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 Nam Kim Steel are associated (or correlated) with CEO Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEO Group JSC has no effect on the direction of Nam Kim i.e., Nam Kim and CEO Group go up and down completely randomly.

Pair Corralation between Nam Kim and CEO Group

Assuming the 90 days trading horizon Nam Kim is expected to generate 3.69 times less return on investment than CEO Group. But when comparing it to its historical volatility, Nam Kim Steel is 1.06 times less risky than CEO Group. It trades about 0.03 of its potential returns per unit of risk. CEO Group JSC is currently generating about 0.11 of returns per unit of risk over similar time horizon. 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

Nam Kim Steel  vs.  CEO Group JSC

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.

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.

Pair Trading with Nam Kim and CEO Group

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

The idea behind Nam Kim Steel and CEO Group JSC 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.