Correlation Between FNSTech and Kbi Metal
Can any of the company-specific risk be diversified away by investing in both FNSTech 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 FNSTech and Kbi Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FNSTech Co and Kbi Metal Co, you can compare the effects of market volatilities on FNSTech 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 FNSTech with a short position of Kbi Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNSTech and Kbi Metal.
Diversification Opportunities for FNSTech and Kbi Metal
Very poor diversification
The 3 months correlation between FNSTech and Kbi is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding FNSTech Co and Kbi Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kbi Metal and FNSTech 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 FNSTech Co 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 FNSTech i.e., FNSTech and Kbi Metal go up and down completely randomly.
Pair Corralation between FNSTech and Kbi Metal
Assuming the 90 days trading horizon FNSTech Co is expected to generate 1.05 times more return on investment than Kbi Metal. However, FNSTech is 1.05 times more volatile than Kbi Metal Co. It trades about 0.17 of its potential returns per unit of risk. Kbi Metal Co is currently generating about 0.18 per unit of risk. If you would invest 840,000 in FNSTech Co on October 14, 2024 and sell it today you would earn a total of 96,000 from holding FNSTech Co or generate 11.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FNSTech Co vs. Kbi Metal Co
Performance |
| Timeline |
| FNSTech |
| Kbi Metal |
FNSTech and Kbi Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNSTech and Kbi Metal
The main advantage of trading using opposite FNSTech and Kbi Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNSTech 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.| FNSTech vs. Samsung Life Insurance | FNSTech vs. Sung Bo Chemicals | FNSTech vs. Dongbu Insurance Co | FNSTech vs. Hanjin Transportation Co |
| Kbi Metal vs. FNSTech Co | Kbi Metal vs. RFTech Co | Kbi Metal vs. SS TECH | Kbi Metal vs. Sungchang Autotech 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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