Correlation Between Kbi Metal and Korea Information
Can any of the company-specific risk be diversified away by investing in both Kbi Metal and Korea Information 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 Korea Information 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 Korea Information Communications, you can compare the effects of market volatilities on Kbi Metal and Korea Information 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 Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kbi Metal and Korea Information.
Diversification Opportunities for Kbi Metal and Korea Information
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kbi and Korea is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and Korea Information Communicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information 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 Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Kbi Metal i.e., Kbi Metal and Korea Information go up and down completely randomly.
Pair Corralation between Kbi Metal and Korea Information
Assuming the 90 days trading horizon Kbi Metal Co is expected to generate 2.74 times more return on investment than Korea Information. However, Kbi Metal is 2.74 times more volatile than Korea Information Communications. It trades about 0.04 of its potential returns per unit of risk. Korea Information Communications is currently generating about -0.01 per unit of risk. If you would invest 186,000 in Kbi Metal Co on October 16, 2024 and sell it today you would earn a total of 50,500 from holding Kbi Metal Co or generate 27.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kbi Metal Co vs. Korea Information Communicatio
Performance |
| Timeline |
| Kbi Metal |
| Korea Information |
Kbi Metal and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kbi Metal and Korea Information
The main advantage of trading using opposite Kbi Metal and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kbi Metal position performs unexpectedly, Korea Information 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 Korea Information will offset losses from the drop in Korea Information's long position.| Kbi Metal vs. Daejung Chemicals Metals | Kbi Metal vs. KPX Green Chemical | Kbi Metal vs. Hankook Furniture Co | Kbi Metal vs. Youngchang Chemical Co |
| Korea Information vs. Daou Technology | Korea Information vs. KG Eco Technology | Korea Information vs. Heungkuk Metaltech CoLtd | Korea Information vs. Digital Imaging Technology |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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