Correlation Between Moonbae Steel and KTB Investment
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
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Moonbae Steel vs. KTB Investment Securities
Performance |
Timeline |
Moonbae Steel |
KTB Investment Securities |
Moonbae Steel and KTB Investment Volatility Contrast
Predicted Return Density |
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.Moonbae Steel vs. LG Chemicals | ||
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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