Correlation Between Kbi Metal and DRGEM
Can any of the company-specific risk be diversified away by investing in both Kbi Metal and DRGEM 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 DRGEM 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 DRGEM, you can compare the effects of market volatilities on Kbi Metal and DRGEM 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 DRGEM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kbi Metal and DRGEM.
Diversification Opportunities for Kbi Metal and DRGEM
Very poor diversification
The 3 months correlation between Kbi and DRGEM is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and DRGEM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRGEM 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 DRGEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRGEM has no effect on the direction of Kbi Metal i.e., Kbi Metal and DRGEM go up and down completely randomly.
Pair Corralation between Kbi Metal and DRGEM
Assuming the 90 days trading horizon Kbi Metal Co is expected to generate 3.41 times more return on investment than DRGEM. However, Kbi Metal is 3.41 times more volatile than DRGEM. It trades about 0.06 of its potential returns per unit of risk. DRGEM is currently generating about -0.12 per unit of risk. If you would invest 137,900 in Kbi Metal Co on November 3, 2024 and sell it today you would earn a total of 78,600 from holding Kbi Metal Co or generate 57.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kbi Metal Co vs. DRGEM
Performance |
| Timeline |
| Kbi Metal |
| DRGEM |
Kbi Metal and DRGEM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kbi Metal and DRGEM
The main advantage of trading using opposite Kbi Metal and DRGEM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kbi Metal position performs unexpectedly, DRGEM 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 DRGEM will offset losses from the drop in DRGEM's long position.| Kbi Metal vs. BooKook Steel Co | Kbi Metal vs. Hyundai BNG Steel | Kbi Metal vs. Fine Besteel Co | Kbi Metal vs. Ssangyong Information Communication |
| DRGEM vs. SAMG Entertainment Co | DRGEM vs. Barunson Entertainment Arts | DRGEM vs. Kakao Games Corp | DRGEM vs. ChipsMedia |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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