Correlation Between TMT Steel and Namyong Terminal

Can any of the company-specific risk be diversified away by investing in both TMT Steel and Namyong Terminal 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 TMT Steel and Namyong Terminal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TMT Steel Public and Namyong Terminal PCL, you can compare the effects of market volatilities on TMT Steel and Namyong Terminal 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 TMT Steel with a short position of Namyong Terminal. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMT Steel and Namyong Terminal.

Diversification Opportunities for TMT Steel and Namyong Terminal

-0.15

Correlation Coefficient

TMT Steel  Namyong Terminal

Good diversification

The 3 months correlation between TMT and Namyong is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding TMT Steel Public and Namyong Terminal PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namyong Terminal PCL and TMT Steel 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 TMT Steel Public are associated (or correlated) with Namyong Terminal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namyong Terminal PCL has no effect on the direction of TMT Steel i.e., TMT Steel and Namyong Terminal go up and down completely randomly.

Pair Corralation between TMT Steel and Namyong Terminal

Assuming the 90 days trading horizon TMT Steel is expected to generate 48.31 times less return on investment than Namyong Terminal. In addition to that, TMT Steel is 1.49 times more volatile than Namyong Terminal PCL. It trades about 0.0 of its total potential returns per unit of risk. Namyong Terminal PCL is currently generating about 0.14 per unit of volatility. If you would invest  294.00  in Namyong Terminal PCL on December 28, 2024 and sell it today you would earn a total of  40.00  from holding Namyong Terminal PCL or generate 13.61% return on investment over 90 days.

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

TMT Steel Public  vs.  Namyong Terminal PCL

TMT Steel Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days TMT Steel Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, TMT Steel is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Namyong Terminal PCL

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Namyong Terminal PCL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Namyong Terminal disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TMT Steel and Namyong Terminal

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

The idea behind TMT Steel Public and Namyong Terminal PCL 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.