Correlation Between Daou Technology and Kbi Metal
Can any of the company-specific risk be diversified away by investing in both Daou Technology 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 Daou Technology and Kbi Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daou Technology and Kbi Metal Co, you can compare the effects of market volatilities on Daou Technology 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 Daou Technology with a short position of Kbi Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daou Technology and Kbi Metal.
Diversification Opportunities for Daou Technology and Kbi Metal
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daou and Kbi is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Daou Technology and Kbi Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kbi Metal and Daou Technology 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 Daou Technology 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 Daou Technology i.e., Daou Technology and Kbi Metal go up and down completely randomly.
Pair Corralation between Daou Technology and Kbi Metal
Assuming the 90 days trading horizon Daou Technology is expected to generate 24.41 times less return on investment than Kbi Metal. But when comparing it to its historical volatility, Daou Technology is 3.7 times less risky than Kbi Metal. It trades about 0.04 of its potential returns per unit of risk. Kbi Metal Co is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 193,300 in Kbi Metal Co on October 28, 2024 and sell it today you would earn a total of 33,200 from holding Kbi Metal Co or generate 17.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daou Technology vs. Kbi Metal Co
Performance |
| Timeline |
| Daou Technology |
| Kbi Metal |
Daou Technology and Kbi Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daou Technology and Kbi Metal
The main advantage of trading using opposite Daou Technology and Kbi Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daou Technology 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.| Daou Technology vs. KB Financial Group | Daou Technology vs. Shinhan Financial Group | Daou Technology vs. Hana Financial | Daou Technology vs. Woori Financial Group |
| Kbi Metal vs. Lotte Data Communication | Kbi Metal vs. Hwasung Industrial Co | Kbi Metal vs. Pyung Hwa Industrial | Kbi Metal vs. Lotte Chilsung Beverage |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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