Correlation Between KPX Chemical and Kbi Metal
Can any of the company-specific risk be diversified away by investing in both KPX Chemical and Kbi Metal 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 KPX Chemical and Kbi Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KPX Chemical and Kbi Metal Co, you can compare the effects of market volatilities on KPX Chemical and Kbi Metal 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 KPX Chemical with a short position of Kbi Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of KPX Chemical and Kbi Metal.
Diversification Opportunities for KPX Chemical and Kbi Metal
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KPX and Kbi is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding KPX Chemical and Kbi Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kbi Metal and KPX Chemical 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 KPX Chemical are associated (or correlated) with Kbi Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kbi Metal has no effect on the direction of KPX Chemical i.e., KPX Chemical and Kbi Metal go up and down completely randomly.
Pair Corralation between KPX Chemical and Kbi Metal
Assuming the 90 days trading horizon KPX Chemical is expected to generate 16.63 times less return on investment than Kbi Metal. But when comparing it to its historical volatility, KPX Chemical is 5.76 times less risky than Kbi Metal. It trades about 0.01 of its potential returns per unit of risk. Kbi Metal Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 174,000 in Kbi Metal Co on September 12, 2024 and sell it today you would earn a total of 13,100 from holding Kbi Metal Co or generate 7.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KPX Chemical vs. Kbi Metal Co
Performance |
| Timeline |
| KPX Chemical |
| Kbi Metal |
KPX Chemical and Kbi Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KPX Chemical and Kbi Metal
The main advantage of trading using opposite KPX Chemical and Kbi Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KPX Chemical position performs unexpectedly, Kbi Metal 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 Kbi Metal will offset losses from the drop in Kbi Metal's long position.| KPX Chemical vs. Kbi Metal Co | KPX Chemical vs. Polaris Office Corp | KPX Chemical vs. Derkwoo Electronics Co | KPX Chemical vs. Daejung Chemicals Metals |
| Kbi Metal vs. Daejung Chemicals Metals | Kbi Metal vs. Dongbang Transport Logistics | Kbi Metal vs. Hankook Furniture Co | Kbi Metal vs. Home Center Holdings |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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