Correlation Between Picomat Plastic and Nam Kim

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

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

Diversification Opportunities for Picomat Plastic and Nam Kim

0.34

Correlation Coefficient

Picomat Plastic  Nam Kim

Weak diversification

The 3 months correlation between Picomat and Nam is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Picomat Plastic JSC and Nam Kim Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nam Kim Steel and Picomat Plastic 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 Picomat Plastic JSC are associated (or correlated) with Nam Kim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nam Kim Steel has no effect on the direction of Picomat Plastic i.e., Picomat Plastic and Nam Kim go up and down completely randomly.

Pair Corralation between Picomat Plastic and Nam Kim

Assuming the 90 days trading horizon Picomat Plastic JSC is expected to generate 0.84 times more return on investment than Nam Kim. However, Picomat Plastic JSC is 1.19 times less risky than Nam Kim. It trades about 0.1 of its potential returns per unit of risk. Nam Kim Steel is currently generating about 0.05 per unit of risk. If you would invest  1,270,000  in Picomat Plastic JSC on December 21, 2024 and sell it today you would earn a total of  130,000  from holding Picomat Plastic JSC or generate 10.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Picomat Plastic JSC  vs.  Nam Kim Steel

Picomat Plastic JSC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Picomat Plastic JSC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Picomat Plastic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

Pair Trading with Picomat Plastic and Nam Kim

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

The idea behind Picomat Plastic JSC and Nam Kim Steel 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.