Correlation Between Kbi Metal and Han Kook
Can any of the company-specific risk be diversified away by investing in both Kbi Metal and Han Kook 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 Han Kook 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 Han Kook Capital, you can compare the effects of market volatilities on Kbi Metal and Han Kook 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 Han Kook. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kbi Metal and Han Kook.
Diversification Opportunities for Kbi Metal and Han Kook
Poor diversification
The 3 months correlation between Kbi and Han is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and Han Kook Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Han Kook Capital 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 Han Kook. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Han Kook Capital has no effect on the direction of Kbi Metal i.e., Kbi Metal and Han Kook go up and down completely randomly.
Pair Corralation between Kbi Metal and Han Kook
Assuming the 90 days trading horizon Kbi Metal Co is expected to generate 5.69 times more return on investment than Han Kook. However, Kbi Metal is 5.69 times more volatile than Han Kook Capital. It trades about 0.0 of its potential returns per unit of risk. Han Kook Capital is currently generating about -0.05 per unit of risk. If you would invest 264,000 in Kbi Metal Co on September 3, 2024 and sell it today you would lose (67,000) from holding Kbi Metal Co or give up 25.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kbi Metal Co vs. Han Kook Capital
Performance |
| Timeline |
| Kbi Metal |
| Han Kook Capital |
Kbi Metal and Han Kook Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kbi Metal and Han Kook
The main advantage of trading using opposite Kbi Metal and Han Kook positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kbi Metal position performs unexpectedly, Han Kook 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 Han Kook will offset losses from the drop in Han Kook's long position.| Kbi Metal vs. Korea Real Estate | Kbi Metal vs. Busan Industrial Co | Kbi Metal vs. UNISEM Co | Kbi Metal vs. RPBio Inc |
| Han Kook vs. Hyundai Home Shopping | Han Kook vs. Haesung Industrial Co | Han Kook vs. Kbi Metal Co | Han Kook vs. Pungguk Ethanol Industrial |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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