Correlation Between Kbi Metal and Daou Technology
Can any of the company-specific risk be diversified away by investing in both Kbi Metal and Daou Technology 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 Daou Technology 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 Daou Technology, you can compare the effects of market volatilities on Kbi Metal and Daou Technology 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 Daou Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kbi Metal and Daou Technology.
Diversification Opportunities for Kbi Metal and Daou Technology
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kbi and Daou is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and Daou Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Technology 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 Daou Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Technology has no effect on the direction of Kbi Metal i.e., Kbi Metal and Daou Technology go up and down completely randomly.
Pair Corralation between Kbi Metal and Daou Technology
Assuming the 90 days trading horizon Kbi Metal Co is expected to generate 3.7 times more return on investment than Daou Technology. However, Kbi Metal is 3.7 times more volatile than Daou Technology. It trades about 0.25 of its potential returns per unit of risk. Daou Technology is currently generating about 0.04 per unit of risk. 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 |
Kbi Metal Co vs. Daou Technology
Performance |
| Timeline |
| Kbi Metal |
| Daou Technology |
Kbi Metal and Daou Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kbi Metal and Daou Technology
The main advantage of trading using opposite Kbi Metal and Daou Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kbi Metal position performs unexpectedly, Daou Technology 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 Daou Technology will offset losses from the drop in Daou Technology's long position.| Kbi Metal vs. Lotte Data Communication | Kbi Metal vs. Hwasung Industrial Co | Kbi Metal vs. Pyung Hwa Industrial | Kbi Metal vs. Lotte Chilsung Beverage |
| Daou Technology vs. KB Financial Group | Daou Technology vs. Shinhan Financial Group | Daou Technology vs. Hana Financial | Daou Technology vs. Woori Financial Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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