Correlation Between Kbi Metal and DAEMO Engineering
Can any of the company-specific risk be diversified away by investing in both Kbi Metal and DAEMO Engineering 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 DAEMO Engineering 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 DAEMO Engineering Co, you can compare the effects of market volatilities on Kbi Metal and DAEMO Engineering 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 DAEMO Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kbi Metal and DAEMO Engineering.
Diversification Opportunities for Kbi Metal and DAEMO Engineering
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kbi and DAEMO is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and DAEMO Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAEMO Engineering 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 DAEMO Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAEMO Engineering has no effect on the direction of Kbi Metal i.e., Kbi Metal and DAEMO Engineering go up and down completely randomly.
Pair Corralation between Kbi Metal and DAEMO Engineering
Assuming the 90 days trading horizon Kbi Metal Co is expected to under-perform the DAEMO Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Kbi Metal Co is 1.72 times less risky than DAEMO Engineering. The stock trades about -0.32 of its potential returns per unit of risk. The DAEMO Engineering Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 965,000 in DAEMO Engineering Co on August 29, 2024 and sell it today you would earn a total of 48,000 from holding DAEMO Engineering Co or generate 4.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kbi Metal Co vs. DAEMO Engineering Co
Performance |
| Timeline |
| Kbi Metal |
| DAEMO Engineering |
Kbi Metal and DAEMO Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kbi Metal and DAEMO Engineering
The main advantage of trading using opposite Kbi Metal and DAEMO Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kbi Metal position performs unexpectedly, DAEMO Engineering 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 DAEMO Engineering will offset losses from the drop in DAEMO Engineering's long position.| Kbi Metal vs. Busan Industrial Co | Kbi Metal vs. Busan Ind | Kbi Metal vs. Mirae Asset Daewoo | Kbi Metal vs. UNISEM Co |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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