Correlation Between Kbi Metal and Kukil Metal

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

Diversification Opportunities for Kbi Metal and Kukil Metal

0.65

Correlation Coefficient

Kbi Metal  Kukil Metal

Poor diversification

The 3 months correlation between Kbi and Kukil is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and Kukil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukil Metal 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 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 Kbi Metal i.e., Kbi Metal and Kukil Metal go up and down completely randomly.

Pair Corralation between Kbi Metal and Kukil Metal

Assuming the 90 days trading horizon Kbi Metal Co is expected to generate 3.29 times more return on investment than Kukil Metal. However, Kbi Metal is 3.29 times more volatile than Kukil Metal Co. It trades about 0.02 of its potential returns per unit of risk. Kukil Metal Co is currently generating about -0.06 per unit of risk. If you would invest  193,300  in Kbi Metal Co on December 30, 2024 and sell it today you would earn a total of  2,000  from holding Kbi Metal Co or generate 1.03% return on investment over 90 days.

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

Kbi Metal Co  vs.  Kukil Metal Co

Kbi Metal

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kbi Metal Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kbi Metal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kukil Metal

Risk-Adjusted Performance

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 somewhat strong basic indicators, Kukil Metal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kbi Metal and Kukil Metal

The main advantage of trading using opposite Kbi Metal and Kukil Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kbi Metal 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 Kbi Metal Co 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.