Correlation Between Kbi Metal and FoodNamoo
Can any of the company-specific risk be diversified away by investing in both Kbi Metal and FoodNamoo 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 FoodNamoo 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 FoodNamoo, you can compare the effects of market volatilities on Kbi Metal and FoodNamoo 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 FoodNamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kbi Metal and FoodNamoo.
Diversification Opportunities for Kbi Metal and FoodNamoo
Poor diversification
The 3 months correlation between Kbi and FoodNamoo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and FoodNamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FoodNamoo 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 FoodNamoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FoodNamoo has no effect on the direction of Kbi Metal i.e., Kbi Metal and FoodNamoo go up and down completely randomly.
Pair Corralation between Kbi Metal and FoodNamoo
Assuming the 90 days trading horizon Kbi Metal Co is expected to generate 1.76 times more return on investment than FoodNamoo. However, Kbi Metal is 1.76 times more volatile than FoodNamoo. It trades about 0.2 of its potential returns per unit of risk. FoodNamoo is currently generating about -0.33 per unit of risk. If you would invest 210,000 in Kbi Metal Co on October 16, 2024 and sell it today you would earn a total of 26,500 from holding Kbi Metal Co or generate 12.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Kbi Metal Co vs. FoodNamoo
Performance |
| Timeline |
| Kbi Metal |
| FoodNamoo |
Kbi Metal and FoodNamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kbi Metal and FoodNamoo
The main advantage of trading using opposite Kbi Metal and FoodNamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kbi Metal position performs unexpectedly, FoodNamoo 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 FoodNamoo will offset losses from the drop in FoodNamoo's long position.| Kbi Metal vs. Korea Shipbuilding Offshore | Kbi Metal vs. Samsung Publishing Co | Kbi Metal vs. Dongnam Chemical Co | Kbi Metal vs. Samick Musical Instruments |
| FoodNamoo vs. Daiyang Metal Co | FoodNamoo vs. Hana Materials | FoodNamoo vs. Hyundai Engineering Plastics | FoodNamoo vs. Korea Information Communications |
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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