Correlation Between Haitai Confectionery and Kbi Metal
Can any of the company-specific risk be diversified away by investing in both Haitai Confectionery 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 Haitai Confectionery and Kbi Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haitai Confectionery Foods and Kbi Metal Co, you can compare the effects of market volatilities on Haitai Confectionery 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 Haitai Confectionery with a short position of Kbi Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haitai Confectionery and Kbi Metal.
Diversification Opportunities for Haitai Confectionery and Kbi Metal
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Haitai and Kbi is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Haitai Confectionery Foods and Kbi Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kbi Metal and Haitai Confectionery 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 Haitai Confectionery Foods 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 Haitai Confectionery i.e., Haitai Confectionery and Kbi Metal go up and down completely randomly.
Pair Corralation between Haitai Confectionery and Kbi Metal
Assuming the 90 days trading horizon Haitai Confectionery is expected to generate 14.44 times less return on investment than Kbi Metal. But when comparing it to its historical volatility, Haitai Confectionery Foods is 2.64 times less risky than Kbi Metal. It trades about 0.02 of its potential returns per unit of risk. Kbi Metal Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 210,000 in Kbi Metal Co on October 17, 2024 and sell it today you would earn a total of 15,500 from holding Kbi Metal Co or generate 7.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haitai Confectionery Foods vs. Kbi Metal Co
Performance |
| Timeline |
| Haitai Confectionery |
| Kbi Metal |
Haitai Confectionery and Kbi Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haitai Confectionery and Kbi Metal
The main advantage of trading using opposite Haitai Confectionery and Kbi Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haitai Confectionery 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.| Haitai Confectionery vs. DB Insurance Co | Haitai Confectionery vs. Korea Information Communications | Haitai Confectionery vs. InfoBank | Haitai Confectionery vs. Ssangyong Information Communication |
| Kbi Metal vs. Haitai Confectionery Foods | Kbi Metal vs. Dongbang Transport Logistics | Kbi Metal vs. Samlip General Foods | Kbi Metal vs. Moonbae Steel |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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