Correlation Between Kbi Metal and Taeyang Metal
Can any of the company-specific risk be diversified away by investing in both Kbi Metal and Taeyang 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 Kbi Metal and Taeyang Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kbi Metal Co and Taeyang Metal Industrial, you can compare the effects of market volatilities on Kbi Metal and Taeyang 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 Kbi Metal with a short position of Taeyang Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kbi Metal and Taeyang Metal.
Diversification Opportunities for Kbi Metal and Taeyang Metal
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kbi and Taeyang is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and Taeyang Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taeyang Metal Industrial and Kbi Metal 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 Kbi Metal Co are associated (or correlated) with Taeyang Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taeyang Metal Industrial has no effect on the direction of Kbi Metal i.e., Kbi Metal and Taeyang Metal go up and down completely randomly.
Pair Corralation between Kbi Metal and Taeyang Metal
Assuming the 90 days trading horizon Kbi Metal Co is expected to under-perform the Taeyang Metal. But the stock apears to be less risky and, when comparing its historical volatility, Kbi Metal Co is 1.08 times less risky than Taeyang Metal. The stock trades about -0.33 of its potential returns per unit of risk. The Taeyang Metal Industrial is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 484,500 in Taeyang Metal Industrial on August 24, 2024 and sell it today you would lose (26,500) from holding Taeyang Metal Industrial or give up 5.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kbi Metal Co vs. Taeyang Metal Industrial
Performance |
| Timeline |
| Kbi Metal |
| Taeyang Metal Industrial |
Kbi Metal and Taeyang Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kbi Metal and Taeyang Metal
The main advantage of trading using opposite Kbi Metal and Taeyang Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kbi Metal position performs unexpectedly, Taeyang 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 Taeyang Metal will offset losses from the drop in Taeyang Metal's long position.| Kbi Metal vs. Busan Industrial Co | Kbi Metal vs. Busan Ind | Kbi Metal vs. Mirae Asset Daewoo | Kbi Metal vs. UNISEM Co |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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