Correlation Between Automobile and KTB Investment
Can any of the company-specific risk be diversified away by investing in both Automobile and KTB Investment 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 Automobile and KTB Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and KTB Investment Securities, you can compare the effects of market volatilities on Automobile and KTB Investment 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 Automobile with a short position of KTB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and KTB Investment.
Diversification Opportunities for Automobile and KTB Investment
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Automobile and KTB is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and KTB Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KTB Investment Securities and Automobile 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 Automobile Pc are associated (or correlated) with KTB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KTB Investment Securities has no effect on the direction of Automobile i.e., Automobile and KTB Investment go up and down completely randomly.
Pair Corralation between Automobile and KTB Investment
Assuming the 90 days trading horizon Automobile Pc is expected to under-perform the KTB Investment. But the stock apears to be less risky and, when comparing its historical volatility, Automobile Pc is 1.93 times less risky than KTB Investment. The stock trades about -0.2 of its potential returns per unit of risk. The KTB Investment Securities is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 326,500 in KTB Investment Securities on October 25, 2024 and sell it today you would lose (23,500) from holding KTB Investment Securities or give up 7.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. KTB Investment Securities
Performance |
| Timeline |
| Automobile Pc |
| KTB Investment Securities |
Automobile and KTB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and KTB Investment
The main advantage of trading using opposite Automobile and KTB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, KTB Investment 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 KTB Investment will offset losses from the drop in KTB Investment's long position.| Automobile vs. Sajo Seafood | Automobile vs. Duksan Hi Metal | Automobile vs. DONGKUK TED METAL | Automobile vs. FOODWELL Co |
| KTB Investment vs. Wonil Special Steel | KTB Investment vs. Kukil Metal Co | KTB Investment vs. DONGKUK TED METAL | KTB Investment vs. INSUN Environmental New |
Check out your portfolio center.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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