Correlation Between Kbi Metal and Seoul Electronics
Can any of the company-specific risk be diversified away by investing in both Kbi Metal and Seoul Electronics 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 Seoul Electronics 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 Seoul Electronics Telecom, you can compare the effects of market volatilities on Kbi Metal and Seoul Electronics 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 Seoul Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kbi Metal and Seoul Electronics.
Diversification Opportunities for Kbi Metal and Seoul Electronics
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kbi and Seoul is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and Seoul Electronics Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Electronics Telecom 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 Seoul Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Electronics Telecom has no effect on the direction of Kbi Metal i.e., Kbi Metal and Seoul Electronics go up and down completely randomly.
Pair Corralation between Kbi Metal and Seoul Electronics
Assuming the 90 days trading horizon Kbi Metal Co is expected to generate 1.68 times more return on investment than Seoul Electronics. However, Kbi Metal is 1.68 times more volatile than Seoul Electronics Telecom. It trades about 0.06 of its potential returns per unit of risk. Seoul Electronics Telecom is currently generating about -0.04 per unit of risk. If you would invest 131,500 in Kbi Metal Co on August 25, 2024 and sell it today you would earn a total of 83,500 from holding Kbi Metal Co or generate 63.5% 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. Seoul Electronics Telecom
Performance |
| Timeline |
| Kbi Metal |
| Seoul Electronics Telecom |
Kbi Metal and Seoul Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kbi Metal and Seoul Electronics
The main advantage of trading using opposite Kbi Metal and Seoul Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kbi Metal position performs unexpectedly, Seoul Electronics 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 Seoul Electronics will offset losses from the drop in Seoul Electronics' long position.| Kbi Metal vs. Busan Industrial Co | Kbi Metal vs. Busan Ind | Kbi Metal vs. Mirae Asset Daewoo | Kbi Metal vs. UNISEM Co |
| Seoul Electronics vs. Samsung Electronics Co | Seoul Electronics vs. Samsung Electronics Co | Seoul Electronics vs. Hyundai Motor Co | Seoul Electronics vs. Hyundai Motor |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |