Correlation Between Formetal and Kakaopay Corp
Can any of the company-specific risk be diversified away by investing in both Formetal and Kakaopay Corp 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 Kakaopay Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formetal Co and kakaopay Corp, you can compare the effects of market volatilities on Formetal and Kakaopay Corp 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 Kakaopay Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formetal and Kakaopay Corp.
Diversification Opportunities for Formetal and Kakaopay Corp
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Formetal and Kakaopay is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Formetal Co and kakaopay Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on kakaopay Corp 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 Kakaopay Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of kakaopay Corp has no effect on the direction of Formetal i.e., Formetal and Kakaopay Corp go up and down completely randomly.
Pair Corralation between Formetal and Kakaopay Corp
Assuming the 90 days trading horizon Formetal Co is expected to generate 0.85 times more return on investment than Kakaopay Corp. However, Formetal Co is 1.17 times less risky than Kakaopay Corp. It trades about 0.13 of its potential returns per unit of risk. kakaopay Corp is currently generating about 0.03 per unit of risk. If you would invest 274,927 in Formetal Co on October 24, 2024 and sell it today you would earn a total of 107,573 from holding Formetal Co or generate 39.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.77% |
| Values | Daily Returns |
Formetal Co vs. kakaopay Corp
Performance |
| Timeline |
| Formetal |
| kakaopay Corp |
Formetal and Kakaopay Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formetal and Kakaopay Corp
The main advantage of trading using opposite Formetal and Kakaopay Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formetal position performs unexpectedly, Kakaopay Corp 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 Kakaopay Corp will offset losses from the drop in Kakaopay Corp's long position.| Formetal vs. Rainbow Robotics | Formetal vs. COWINTECH Co | Formetal vs. CS BEARING CoLtd | Formetal vs. Young Poong Precision |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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