Correlation Between Kbi Metal and Itcen Co
Can any of the company-specific risk be diversified away by investing in both Kbi Metal and Itcen Co 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 Itcen Co 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 Itcen Co, you can compare the effects of market volatilities on Kbi Metal and Itcen Co 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 Itcen Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kbi Metal and Itcen Co.
Diversification Opportunities for Kbi Metal and Itcen Co
Poor diversification
The 3 months correlation between Kbi and Itcen is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and Itcen Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itcen Co 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 Itcen Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itcen Co has no effect on the direction of Kbi Metal i.e., Kbi Metal and Itcen Co go up and down completely randomly.
Pair Corralation between Kbi Metal and Itcen Co
Assuming the 90 days trading horizon Kbi Metal Co is expected to generate 1.01 times more return on investment than Itcen Co. However, Kbi Metal is 1.01 times more volatile than Itcen Co. It trades about -0.03 of its potential returns per unit of risk. Itcen Co is currently generating about -0.05 per unit of risk. If you would invest 205,500 in Kbi Metal Co on September 29, 2024 and sell it today you would lose (12,200) from holding Kbi Metal Co or give up 5.94% 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. Itcen Co
Performance |
| Timeline |
| Kbi Metal |
| Itcen Co |
Kbi Metal and Itcen Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kbi Metal and Itcen Co
The main advantage of trading using opposite Kbi Metal and Itcen Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kbi Metal position performs unexpectedly, Itcen Co 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 Itcen Co will offset losses from the drop in Itcen Co's long position.| Kbi Metal vs. Hyundai Home Shopping | Kbi Metal vs. Clean Science co | Kbi Metal vs. Dongil Metal Co | Kbi Metal vs. Korea Shipbuilding Offshore |
| Itcen Co vs. Ssangyong Materials Corp | Itcen Co vs. Daejung Chemicals Metals | Itcen Co vs. Kbi Metal Co | Itcen Co vs. Top Material Co |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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