Correlation Between KC Metalsheet and Union Petrochemical
Can any of the company-specific risk be diversified away by investing in both KC Metalsheet and Union Petrochemical 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 KC Metalsheet and Union Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KC Metalsheet Public and Union Petrochemical Public, you can compare the effects of market volatilities on KC Metalsheet and Union Petrochemical 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 KC Metalsheet with a short position of Union Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of KC Metalsheet and Union Petrochemical.
Diversification Opportunities for KC Metalsheet and Union Petrochemical
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KCM and Union is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding KC Metalsheet Public and Union Petrochemical Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Petrochemical and KC Metalsheet 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 KC Metalsheet Public are associated (or correlated) with Union Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Petrochemical has no effect on the direction of KC Metalsheet i.e., KC Metalsheet and Union Petrochemical go up and down completely randomly.
Pair Corralation between KC Metalsheet and Union Petrochemical
Assuming the 90 days trading horizon KC Metalsheet Public is expected to generate 0.62 times more return on investment than Union Petrochemical. However, KC Metalsheet Public is 1.62 times less risky than Union Petrochemical. It trades about -0.08 of its potential returns per unit of risk. Union Petrochemical Public is currently generating about -0.1 per unit of risk. If you would invest 22.00 in KC Metalsheet Public on December 1, 2024 and sell it today you would lose (2.00) from holding KC Metalsheet Public or give up 9.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KC Metalsheet Public vs. Union Petrochemical Public
Performance |
| Timeline |
| KC Metalsheet Public |
| Union Petrochemical |
KC Metalsheet and Union Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KC Metalsheet and Union Petrochemical
The main advantage of trading using opposite KC Metalsheet and Union Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KC Metalsheet position performs unexpectedly, Union Petrochemical 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 Union Petrochemical will offset losses from the drop in Union Petrochemical's long position.| KC Metalsheet vs. Masterkool International Public | KC Metalsheet vs. Thai Ha Public | KC Metalsheet vs. Kingsmen CMTI Public | KC Metalsheet vs. Hydrotek Public |
| Union Petrochemical vs. Vibhavadi Medical Center | Union Petrochemical vs. TWZ Public | Union Petrochemical vs. WHA Public | Union Petrochemical vs. Tata Steel 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 CEOs Directory module to screen CEOs from public companies around the world.
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