Correlation Between Kbi Metal and GemVaxKAEL CoLtd

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

Diversification Opportunities for Kbi Metal and GemVaxKAEL CoLtd

0.03

Correlation Coefficient

Kbi Metal  GemVaxKAEL CoLtd

Significant diversification

The 3 months correlation between Kbi and GemVaxKAEL is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and GemVaxKAEL CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GemVaxKAEL CoLtd 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 GemVaxKAEL CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GemVaxKAEL CoLtd has no effect on the direction of Kbi Metal i.e., Kbi Metal and GemVaxKAEL CoLtd go up and down completely randomly.

Pair Corralation between Kbi Metal and GemVaxKAEL CoLtd

Assuming the 90 days trading horizon Kbi Metal is expected to generate 2.08 times less return on investment than GemVaxKAEL CoLtd. But when comparing it to its historical volatility, Kbi Metal Co is 1.07 times less risky than GemVaxKAEL CoLtd. It trades about 0.16 of its potential returns per unit of risk. GemVaxKAEL CoLtd is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  1,490,000  in GemVaxKAEL CoLtd on October 23, 2024 and sell it today you would earn a total of  328,000  from holding GemVaxKAEL CoLtd or generate 22.01% return on investment over 90 days.

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

Kbi Metal Co  vs.  GemVaxKAEL CoLtd

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.

GemVaxKAEL CoLtd

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GemVaxKAEL CoLtd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GemVaxKAEL CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kbi Metal and GemVaxKAEL CoLtd

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

The idea behind Kbi Metal Co and GemVaxKAEL CoLtd 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.