Correlation Between Fine Metal and K W
Can any of the company-specific risk be diversified away by investing in both Fine Metal and K W 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 Fine Metal and K W into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fine Metal Technologies and K W Metal, you can compare the effects of market volatilities on Fine Metal and K W 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 Fine Metal with a short position of K W. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fine Metal and K W.
Diversification Opportunities for Fine Metal and K W
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fine and KWM is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fine Metal Technologies and K W Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K W Metal and Fine Metal 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 Fine Metal Technologies are associated (or correlated) with K W. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K W Metal has no effect on the direction of Fine Metal i.e., Fine Metal and K W go up and down completely randomly.
Pair Corralation between Fine Metal and K W
Assuming the 90 days trading horizon Fine Metal Technologies is expected to generate 1.0 times more return on investment than K W. However, Fine Metal Technologies is 1.0 times less risky than K W. It trades about 0.04 of its potential returns per unit of risk. K W Metal is currently generating about 0.04 per unit of risk. If you would invest 2,664 in Fine Metal Technologies on September 13, 2024 and sell it today you would earn a total of 586.00 from holding Fine Metal Technologies or generate 22.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fine Metal Technologies vs. K W Metal
Performance |
| Timeline |
| Fine Metal Technologies |
| K W Metal |
Fine Metal and K W Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fine Metal and K W
The main advantage of trading using opposite Fine Metal and K W positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fine Metal position performs unexpectedly, K W 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 K W will offset losses from the drop in K W's long position.| Fine Metal vs. Tata Steel Public | Fine Metal vs. TTCL Public | Fine Metal vs. Thaifoods Group Public | Fine Metal vs. TMT Steel Public |
| K W vs. Masterkool International Public | K W vs. Infraset Public | K W vs. KC Metalsheet Public | K W vs. DOD Biotech Public |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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