Correlation Between Kbi Metal and Worldex Industry

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

Diversification Opportunities for Kbi Metal and Worldex Industry

0.27

Correlation Coefficient

Kbi Metal  Worldex Industry

Modest diversification

The 3 months correlation between Kbi and Worldex is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and Worldex Industry Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldex Industry Trading 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 Worldex Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldex Industry Trading has no effect on the direction of Kbi Metal i.e., Kbi Metal and Worldex Industry go up and down completely randomly.

Pair Corralation between Kbi Metal and Worldex Industry

Assuming the 90 days trading horizon Kbi Metal is expected to generate 3.41 times less return on investment than Worldex Industry. In addition to that, Kbi Metal is 1.16 times more volatile than Worldex Industry Trading. It trades about 0.04 of its total potential returns per unit of risk. Worldex Industry Trading is currently generating about 0.15 per unit of volatility. If you would invest  1,639,000  in Worldex Industry Trading on December 25, 2024 and sell it today you would earn a total of  386,000  from holding Worldex Industry Trading or generate 23.55% return on investment over 90 days.

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

Kbi Metal Co  vs.  Worldex Industry Trading

Kbi Metal

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kbi Metal Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kbi Metal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Worldex Industry Trading

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Worldex Industry Trading are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Worldex Industry sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kbi Metal and Worldex Industry

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

The idea behind Kbi Metal Co and Worldex Industry Trading 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.