Correlation Between DRB Industrial and KPX Green
Can any of the company-specific risk be diversified away by investing in both DRB Industrial 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 DRB Industrial and KPX Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DRB Industrial Co and KPX Green Chemical, you can compare the effects of market volatilities on DRB Industrial 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 DRB Industrial with a short position of KPX Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of DRB Industrial and KPX Green.
Diversification Opportunities for DRB Industrial and KPX Green
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DRB and KPX is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding DRB Industrial 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 DRB Industrial 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 DRB Industrial 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 DRB Industrial i.e., DRB Industrial and KPX Green go up and down completely randomly.
Pair Corralation between DRB Industrial and KPX Green
Assuming the 90 days trading horizon DRB Industrial Co is expected to under-perform the KPX Green. But the stock apears to be less risky and, when comparing its historical volatility, DRB Industrial Co is 2.21 times less risky than KPX Green. The stock trades about -0.06 of its potential returns per unit of risk. The KPX Green Chemical is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 701,000 in KPX Green Chemical on November 8, 2024 and sell it today you would earn a total of 29,000 from holding KPX Green Chemical or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 89.47% |
| Values | Daily Returns |
DRB Industrial Co vs. KPX Green Chemical
Performance |
| Timeline |
| DRB Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| KPX Green Chemical |
DRB Industrial and KPX Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DRB Industrial and KPX Green
The main advantage of trading using opposite DRB Industrial and KPX Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DRB Industrial 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.| DRB Industrial vs. AptaBio Therapeutics | DRB Industrial vs. Daewoo SBI SPAC | DRB Industrial vs. Dream Security co | DRB Industrial vs. Microfriend |
| KPX Green vs. Seoyon Topmetal Co | KPX Green vs. Songwon Industrial Co | KPX Green vs. Hanjin Transportation Co | KPX Green vs. TOPMATERIAL LTD |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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