Correlation Between Kbi Metal and Finetechnix CoLtd

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

Diversification Opportunities for Kbi Metal and Finetechnix CoLtd

0.59

Correlation Coefficient

Kbi Metal  Finetechnix CoLtd

Very weak diversification

The 3 months correlation between Kbi and Finetechnix is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and Finetechnix CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finetechnix 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 Finetechnix CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finetechnix CoLtd has no effect on the direction of Kbi Metal i.e., Kbi Metal and Finetechnix CoLtd go up and down completely randomly.

Pair Corralation between Kbi Metal and Finetechnix CoLtd

Assuming the 90 days trading horizon Kbi Metal is expected to generate 4.14 times less return on investment than Finetechnix CoLtd. But when comparing it to its historical volatility, Kbi Metal Co is 2.95 times less risky than Finetechnix CoLtd. It trades about 0.04 of its potential returns per unit of risk. Finetechnix CoLtd is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  103,100  in Finetechnix CoLtd on December 26, 2024 and sell it today you would earn a total of  9,700  from holding Finetechnix CoLtd or generate 9.41% return on investment over 90 days.

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

Kbi Metal Co  vs.  Finetechnix CoLtd

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.

Finetechnix CoLtd

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Finetechnix CoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Finetechnix CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kbi Metal and Finetechnix CoLtd

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

The idea behind Kbi Metal Co and Finetechnix 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.