Correlation Between Nam Kim and Techno Agricultural

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

Diversification Opportunities for Nam Kim and Techno Agricultural

0.78

Correlation Coefficient

Nam Kim  Techno Agricultural

Poor diversification

The 3 months correlation between Nam and Techno is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nam Kim Steel and Techno Agricultural Supplying in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techno Agricultural 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 Techno Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techno Agricultural has no effect on the direction of Nam Kim i.e., Nam Kim and Techno Agricultural go up and down completely randomly.

Pair Corralation between Nam Kim and Techno Agricultural

Assuming the 90 days trading horizon Nam Kim Steel is expected to under-perform the Techno Agricultural. In addition to that, Nam Kim is 3.56 times more volatile than Techno Agricultural Supplying. It trades about -0.16 of its total potential returns per unit of risk. Techno Agricultural Supplying is currently generating about -0.23 per unit of volatility. If you would invest  270,000  in Techno Agricultural Supplying on October 20, 2024 and sell it today you would lose (35,000) from holding Techno Agricultural Supplying or give up 12.96% of portfolio value over 90 days.

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

Nam Kim Steel  vs.  Techno Agricultural Supplying

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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Techno Agricultural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Techno Agricultural Supplying 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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Nam Kim and Techno Agricultural

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

The idea behind Nam Kim Steel and Techno Agricultural Supplying 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..