Correlation Between Kbi Metal and PH Tech

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

Diversification Opportunities for Kbi Metal and PH Tech

0.51

Correlation Coefficient

Kbi Metal  PH Tech

Very weak diversification

The 3 months correlation between Kbi and 239890 is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and PH Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PH 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 PH Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PH Tech has no effect on the direction of Kbi Metal i.e., Kbi Metal and PH Tech go up and down completely randomly.

Pair Corralation between Kbi Metal and PH Tech

Assuming the 90 days trading horizon Kbi Metal Co is expected to generate 1.12 times more return on investment than PH Tech. However, Kbi Metal is 1.12 times more volatile than PH Tech Co. It trades about 0.02 of its potential returns per unit of risk. PH Tech Co is currently generating about -0.1 per unit of risk. If you would invest  204,500  in Kbi Metal Co on December 23, 2024 and sell it today you would earn a total of  0.00  from holding Kbi Metal Co or generate 0.0% 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.  PH Tech 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.

PH Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days PH Tech 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kbi Metal and PH Tech

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

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