Correlation Between SBI Investment and Kukil Metal

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

Diversification Opportunities for SBI Investment and Kukil Metal

-0.53
  Correlation Coefficient

Excellent diversification

The 3 months correlation between SBI and Kukil is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and Kukil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukil Metal and SBI Investment 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 SBI Investment KOREA are associated (or correlated) with Kukil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukil Metal has no effect on the direction of SBI Investment i.e., SBI Investment and Kukil Metal go up and down completely randomly.

Pair Corralation between SBI Investment and Kukil Metal

Assuming the 90 days trading horizon SBI Investment is expected to generate 1.19 times less return on investment than Kukil Metal. In addition to that, SBI Investment is 1.49 times more volatile than Kukil Metal Co. It trades about 0.3 of its total potential returns per unit of risk. Kukil Metal Co is currently generating about 0.53 per unit of volatility. If you would invest  151,733  in Kukil Metal Co on October 9, 2024 and sell it today you would earn a total of  25,167  from holding Kukil Metal Co or generate 16.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

SBI Investment KOREA  vs.  Kukil Metal Co

 Performance 
       Timeline  
SBI Investment KOREA 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in SBI Investment KOREA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SBI Investment sustained solid returns over the last few months and may actually be approaching a breakup point.
Kukil Metal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kukil Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

SBI Investment and Kukil Metal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SBI Investment and Kukil Metal

The main advantage of trading using opposite SBI Investment and Kukil Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Investment position performs unexpectedly, Kukil Metal 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 Kukil Metal will offset losses from the drop in Kukil Metal's long position.
The idea behind SBI Investment KOREA and Kukil Metal Co 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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