Correlation Between Formetal and KPX Green
Can any of the company-specific risk be diversified away by investing in both Formetal and KPX Green 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 Formetal and KPX Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formetal Co and KPX Green Chemical, you can compare the effects of market volatilities on Formetal and KPX Green 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 Formetal with a short position of KPX Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formetal and KPX Green.
Diversification Opportunities for Formetal and KPX Green
Poor diversification
The 3 months correlation between Formetal and KPX is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Formetal Co and KPX Green Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPX Green Chemical and Formetal 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 Formetal Co are associated (or correlated) with KPX Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPX Green Chemical has no effect on the direction of Formetal i.e., Formetal and KPX Green go up and down completely randomly.
Pair Corralation between Formetal and KPX Green
Assuming the 90 days trading horizon Formetal Co is expected to generate 0.84 times more return on investment than KPX Green. However, Formetal Co is 1.19 times less risky than KPX Green. It trades about 0.37 of its potential returns per unit of risk. KPX Green Chemical is currently generating about 0.07 per unit of risk. If you would invest 289,139 in Formetal Co on October 25, 2024 and sell it today you would earn a total of 90,361 from holding Formetal Co or generate 31.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formetal Co vs. KPX Green Chemical
Performance |
| Timeline |
| Formetal |
| KPX Green Chemical |
Formetal and KPX Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formetal and KPX Green
The main advantage of trading using opposite Formetal and KPX Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formetal position performs unexpectedly, KPX Green 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 KPX Green will offset losses from the drop in KPX Green's long position.| Formetal vs. Sangsangin Investment Securities | Formetal vs. TS Investment Corp | Formetal vs. Daeduck Electronics Co | Formetal vs. DSC Investment |
| KPX Green vs. Kbi Metal Co | KPX Green vs. Kukil Metal Co | KPX Green vs. Formetal Co | KPX Green vs. Heungkuk Metaltech CoLtd |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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