Correlation Between Kbi Metal and SEOJEON ELECTRIC
Can any of the company-specific risk be diversified away by investing in both Kbi Metal and SEOJEON ELECTRIC 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 SEOJEON ELECTRIC 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 SEOJEON ELECTRIC MACHINERY, you can compare the effects of market volatilities on Kbi Metal and SEOJEON ELECTRIC 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 SEOJEON ELECTRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kbi Metal and SEOJEON ELECTRIC.
Diversification Opportunities for Kbi Metal and SEOJEON ELECTRIC
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kbi and SEOJEON is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and SEOJEON ELECTRIC MACHINERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEOJEON ELECTRIC MAC 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 SEOJEON ELECTRIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEOJEON ELECTRIC MAC has no effect on the direction of Kbi Metal i.e., Kbi Metal and SEOJEON ELECTRIC go up and down completely randomly.
Pair Corralation between Kbi Metal and SEOJEON ELECTRIC
Assuming the 90 days trading horizon Kbi Metal Co is expected to generate 1.42 times more return on investment than SEOJEON ELECTRIC. However, Kbi Metal is 1.42 times more volatile than SEOJEON ELECTRIC MACHINERY. It trades about 0.18 of its potential returns per unit of risk. SEOJEON ELECTRIC MACHINERY is currently generating about 0.18 per unit of risk. If you would invest 196,900 in Kbi Metal Co on October 14, 2024 and sell it today you would earn a total of 22,600 from holding Kbi Metal Co or generate 11.48% 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. SEOJEON ELECTRIC MACHINERY
Performance |
Timeline |
Kbi Metal |
SEOJEON ELECTRIC MAC |
Kbi Metal and SEOJEON ELECTRIC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kbi Metal and SEOJEON ELECTRIC
The main advantage of trading using opposite Kbi Metal and SEOJEON ELECTRIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kbi Metal position performs unexpectedly, SEOJEON ELECTRIC 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 SEOJEON ELECTRIC will offset losses from the drop in SEOJEON ELECTRIC's long position.Kbi Metal vs. Hwasung Industrial Co | Kbi Metal vs. Eagon Industrial Co | Kbi Metal vs. Pyung Hwa Industrial | Kbi Metal vs. Hyundai Industrial Co |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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