Correlation Between Nam Kim and Ho Chi

Can any of the company-specific risk be diversified away by investing in both Nam Kim and Ho Chi 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 Ho Chi 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 Ho Chi Minh, you can compare the effects of market volatilities on Nam Kim and Ho Chi 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 Ho Chi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nam Kim and Ho Chi.

Diversification Opportunities for Nam Kim and Ho Chi

0.39

Correlation Coefficient

Nam Kim  Ho Chi

Weak diversification

The 3 months correlation between Nam and HDB is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Nam Kim Steel and Ho Chi Minh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ho Chi Minh 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 Ho Chi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ho Chi Minh has no effect on the direction of Nam Kim i.e., Nam Kim and Ho Chi go up and down completely randomly.

Pair Corralation between Nam Kim and Ho Chi

Assuming the 90 days trading horizon Nam Kim Steel is expected to generate 1.06 times more return on investment than Ho Chi. However, Nam Kim is 1.06 times more volatile than Ho Chi Minh. It trades about 0.06 of its potential returns per unit of risk. Ho Chi Minh is currently generating about 0.0 per unit of risk. If you would invest  1,475,000  in Nam Kim Steel on December 19, 2024 and sell it today you would earn a total of  95,000  from holding Nam Kim Steel or generate 6.44% return on investment over 90 days.

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

Nam Kim Steel  vs.  Ho Chi Minh

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 4 (%) 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.

Ho Chi Minh

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ho Chi Minh has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, Ho Chi is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nam Kim and Ho Chi

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

The idea behind Nam Kim Steel and Ho Chi Minh 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.