Correlation Between Kbi Metal and HuMC

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

Diversification Opportunities for Kbi Metal and HuMC

0.6

Correlation Coefficient

Kbi Metal  HuMC

Poor diversification

The 3 months correlation between Kbi and HuMC is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and HuMC Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HuMC 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 HuMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HuMC has no effect on the direction of Kbi Metal i.e., Kbi Metal and HuMC go up and down completely randomly.

Pair Corralation between Kbi Metal and HuMC

Assuming the 90 days trading horizon Kbi Metal Co is expected to generate 3.27 times more return on investment than HuMC. However, Kbi Metal is 3.27 times more volatile than HuMC Co. It trades about 0.02 of its potential returns per unit of risk. HuMC Co is currently generating about 0.03 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.  HuMC 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.

HuMC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HuMC Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HuMC 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 HuMC

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

The idea behind Kbi Metal Co and HuMC 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.