Correlation Between Kbi Metal and Yura Tech

Can any of the company-specific risk be diversified away by investing in both Kbi Metal and Yura Tech 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 Yura Tech 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 Yura Tech Co, you can compare the effects of market volatilities on Kbi Metal and Yura Tech 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 Yura Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kbi Metal and Yura Tech.

Diversification Opportunities for Kbi Metal and Yura Tech

-0.25

Correlation Coefficient

Kbi Metal  Yura Tech

Very good diversification

The 3 months correlation between Kbi and Yura is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and Yura Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yura Tech 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 Yura Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yura Tech has no effect on the direction of Kbi Metal i.e., Kbi Metal and Yura Tech go up and down completely randomly.

Pair Corralation between Kbi Metal and Yura Tech

Assuming the 90 days trading horizon Kbi Metal Co is expected to generate 1.51 times more return on investment than Yura Tech. However, Kbi Metal is 1.51 times more volatile than Yura Tech Co. It trades about 0.04 of its potential returns per unit of risk. Yura Tech Co is currently generating about 0.02 per unit of risk. If you would invest  136,500  in Kbi Metal Co on October 4, 2024 and sell it today you would earn a total of  56,800  from holding Kbi Metal Co or generate 41.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kbi Metal Co  vs.  Yura Tech Co

Kbi Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kbi Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Yura Tech

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Kbi Metal and Yura Tech

The main advantage of trading using opposite Kbi Metal and Yura Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kbi Metal position performs unexpectedly, Yura Tech 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 Yura Tech will offset losses from the drop in Yura Tech's long position.

The idea behind Kbi Metal Co and Yura Tech 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.