Correlation Between Nam Kim and Sao Vang

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

Diversification Opportunities for Nam Kim and Sao Vang

0.54

Correlation Coefficient

Nam Kim  Sao Vang

Very weak diversification

The 3 months correlation between Nam and Sao is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Nam Kim Steel and Sao Vang Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sao Vang Rubber 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 Sao Vang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sao Vang Rubber has no effect on the direction of Nam Kim i.e., Nam Kim and Sao Vang go up and down completely randomly.

Pair Corralation between Nam Kim and Sao Vang

Assuming the 90 days trading horizon Nam Kim Steel is expected to generate 0.34 times more return on investment than Sao Vang. However, Nam Kim Steel is 2.95 times less risky than Sao Vang. It trades about -0.08 of its potential returns per unit of risk. Sao Vang Rubber is currently generating about -0.08 per unit of risk. If you would invest  2,070,000  in Nam Kim Steel on September 5, 2024 and sell it today you would lose (150,000) from holding Nam Kim Steel or give up 7.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	64.62%
Values	Daily Returns

Nam Kim Steel  vs.  Sao Vang Rubber

Nam Kim Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nam Kim Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Sao Vang Rubber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sao Vang Rubber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Nam Kim and Sao Vang

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

The idea behind Nam Kim Steel and Sao Vang Rubber 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.