Correlation Between Dongnam Chemical and Kbi Metal
Can any of the company-specific risk be diversified away by investing in both Dongnam Chemical and Kbi Metal 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 Dongnam Chemical and Kbi Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongnam Chemical Co and Kbi Metal Co, you can compare the effects of market volatilities on Dongnam Chemical and Kbi Metal 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 Dongnam Chemical with a short position of Kbi Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongnam Chemical and Kbi Metal.
Diversification Opportunities for Dongnam Chemical and Kbi Metal
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dongnam and Kbi is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dongnam Chemical Co and Kbi Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kbi Metal and Dongnam Chemical 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 Dongnam Chemical Co are associated (or correlated) with Kbi Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kbi Metal has no effect on the direction of Dongnam Chemical i.e., Dongnam Chemical and Kbi Metal go up and down completely randomly.
Pair Corralation between Dongnam Chemical and Kbi Metal
Assuming the 90 days trading horizon Dongnam Chemical Co is expected to under-perform the Kbi Metal. But the stock apears to be less risky and, when comparing its historical volatility, Dongnam Chemical Co is 3.81 times less risky than Kbi Metal. The stock trades about -0.05 of its potential returns per unit of risk. The Kbi Metal Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 137,400 in Kbi Metal Co on October 16, 2024 and sell it today you would earn a total of 87,600 from holding Kbi Metal Co or generate 63.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongnam Chemical Co vs. Kbi Metal Co
Performance |
| Timeline |
| Dongnam Chemical |
| Kbi Metal |
Dongnam Chemical and Kbi Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongnam Chemical and Kbi Metal
The main advantage of trading using opposite Dongnam Chemical and Kbi Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongnam Chemical position performs unexpectedly, Kbi Metal 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 Kbi Metal will offset losses from the drop in Kbi Metal's long position.| Dongnam Chemical vs. AptaBio Therapeutics | Dongnam Chemical vs. Daewoo SBI SPAC | Dongnam Chemical vs. Dream Security co | Dongnam Chemical vs. Microfriend |
| Kbi Metal vs. Korea Shipbuilding Offshore | Kbi Metal vs. Samsung Publishing Co | Kbi Metal vs. Dongnam Chemical Co | Kbi Metal vs. Samick Musical Instruments |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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