Correlation Between Kbi Metal and Union Materials
Can any of the company-specific risk be diversified away by investing in both Kbi Metal and Union Materials 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 Kbi Metal and Union Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kbi Metal Co and Union Materials Corp, you can compare the effects of market volatilities on Kbi Metal and Union Materials 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 Kbi Metal with a short position of Union Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kbi Metal and Union Materials.
Diversification Opportunities for Kbi Metal and Union Materials
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kbi and Union is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and Union Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Materials Corp and Kbi 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 Kbi Metal Co are associated (or correlated) with Union Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Materials Corp has no effect on the direction of Kbi Metal i.e., Kbi Metal and Union Materials go up and down completely randomly.
Pair Corralation between Kbi Metal and Union Materials
Assuming the 90 days trading horizon Kbi Metal Co is expected to generate 1.27 times more return on investment than Union Materials. However, Kbi Metal is 1.27 times more volatile than Union Materials Corp. It trades about 0.01 of its potential returns per unit of risk. Union Materials Corp is currently generating about -0.02 per unit of risk. If you would invest 210,000 in Kbi Metal Co on December 4, 2024 and sell it today you would lose (6,500) from holding Kbi Metal Co or give up 3.1% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Kbi Metal Co vs. Union Materials Corp
Performance |
Timeline |
Kbi Metal |
Union Materials Corp |
Kbi Metal and Union Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kbi Metal and Union Materials
The main advantage of trading using opposite Kbi Metal and Union Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kbi Metal position performs unexpectedly, Union Materials 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 Materials will offset losses from the drop in Union Materials' long position.Kbi Metal vs. Lake Materials Co | Kbi Metal vs. Solus Advanced Materials | Kbi Metal vs. Dongbu Insurance Co | Kbi Metal vs. Lotte Non Life Insurance |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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