Correlation Between Kbi Metal and IL Science

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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 Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.65%
ValuesDaily Returns

Kbi Metal Co  vs.  IL Science Co

 Performance 
       Timeline  
Kbi Metal 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Kbi Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
IL Science 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days IL Science Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

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.
The idea behind Kbi Metal Co and IL Science Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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