Correlation Between Moonbae Steel and KTB Investment

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Can any of the company-specific risk be diversified away by investing in both Moonbae Steel and KTB Investment 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 Moonbae Steel and KTB Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moonbae Steel and KTB Investment Securities, you can compare the effects of market volatilities on Moonbae Steel and KTB Investment 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 Moonbae Steel with a short position of KTB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moonbae Steel and KTB Investment.

Diversification Opportunities for Moonbae Steel and KTB Investment

MoonbaeKTBDiversified AwayMoonbaeKTBDiversified Away100%
0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Moonbae and KTB is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Moonbae Steel and KTB Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KTB Investment Securities and Moonbae Steel 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 Moonbae Steel are associated (or correlated) with KTB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KTB Investment Securities has no effect on the direction of Moonbae Steel i.e., Moonbae Steel and KTB Investment go up and down completely randomly.

Pair Corralation between Moonbae Steel and KTB Investment

Assuming the 90 days trading horizon Moonbae Steel is expected to under-perform the KTB Investment. But the stock apears to be less risky and, when comparing its historical volatility, Moonbae Steel is 1.09 times less risky than KTB Investment. The stock trades about -0.01 of its potential returns per unit of risk. The KTB Investment Securities is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  299,000  in KTB Investment Securities on October 13, 2024 and sell it today you would earn a total of  1,500  from holding KTB Investment Securities or generate 0.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Moonbae Steel  vs.  KTB Investment Securities

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20-1001020
JavaScript chart by amCharts 3.21.15008420 030210
       Timeline  
Moonbae Steel 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Moonbae Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Moonbae Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2,1002,2002,3002,4002,5002,600
KTB Investment Securities 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in KTB Investment Securities are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KTB Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2,4002,6002,8003,0003,2003,4003,600

Moonbae Steel and KTB Investment Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.35-3.26-2.17-1.07-0.01811.052.133.224.35.39 0.0400.0450.050
JavaScript chart by amCharts 3.21.15008420 030210
       Returns  

Pair Trading with Moonbae Steel and KTB Investment

The main advantage of trading using opposite Moonbae Steel and KTB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moonbae Steel position performs unexpectedly, KTB Investment 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 KTB Investment will offset losses from the drop in KTB Investment's long position.
The idea behind Moonbae Steel and KTB Investment Securities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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