Correlation Between Kbi Metal and IL Science
Can any of the company-specific risk be diversified away by investing in both Kbi Metal and IL Science 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 IL Science 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 IL Science Co, you can compare the effects of market volatilities on Kbi Metal and IL Science 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 IL Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kbi Metal and IL Science.
Diversification Opportunities for Kbi Metal and IL Science
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kbi and 307180 is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and IL Science Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IL Science 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 IL Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IL Science has no effect on the direction of Kbi Metal i.e., Kbi Metal and IL Science go up and down completely randomly.
Pair Corralation between Kbi Metal and IL Science
Assuming the 90 days trading horizon Kbi Metal Co is expected to under-perform the IL Science. In addition to that, Kbi Metal is 1.16 times more volatile than IL Science Co. It trades about -0.4 of its total potential returns per unit of risk. IL Science Co is currently generating about -0.18 per unit of volatility. If you would invest 312,500 in IL Science Co on September 1, 2024 and sell it today you would lose (37,000) from holding IL Science Co or give up 11.84% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.65% |
Values | Daily Returns |
Kbi Metal Co vs. IL Science Co
Performance |
Timeline |
Kbi Metal |
IL Science |
Kbi Metal and IL Science Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kbi Metal and IL Science
The main advantage of trading using opposite Kbi Metal and IL Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kbi Metal position performs unexpectedly, IL Science 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 IL Science will offset losses from the drop in IL Science's long position.Kbi Metal vs. LG Display | Kbi Metal vs. Hyundai Motor | Kbi Metal vs. Hyundai Motor Co | Kbi Metal vs. Hyundai Motor 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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