Correlation Between Daou Data and Kbi Metal

Can any of the company-specific risk be diversified away by investing in both Daou Data and Kbi Metal 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 Daou Data and Kbi Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Daou Data Corp and Kbi Metal Co, you can compare the effects of market volatilities on Daou Data and Kbi Metal 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 Daou Data with a short position of Kbi Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daou Data and Kbi Metal.

Diversification Opportunities for Daou Data and Kbi Metal

-0.1

Correlation Coefficient

Daou Data  Kbi Metal

Good diversification

The 3 months correlation between Daou and Kbi is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Daou Data Corp and Kbi Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kbi Metal and Daou Data 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 Daou Data Corp are associated (or correlated) with Kbi Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kbi Metal has no effect on the direction of Daou Data i.e., Daou Data and Kbi Metal go up and down completely randomly.

Pair Corralation between Daou Data and Kbi Metal

Assuming the 90 days trading horizon Daou Data Corp is expected to generate 0.47 times more return on investment than Kbi Metal. However, Daou Data Corp is 2.12 times less risky than Kbi Metal. It trades about 0.19 of its potential returns per unit of risk. Kbi Metal Co is currently generating about 0.02 per unit of risk. If you would invest  1,020,042  in Daou Data Corp on December 24, 2024 and sell it today you would earn a total of  164,958  from holding Daou Data Corp or generate 16.17% return on investment over 90 days.

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

Daou Data Corp  vs.  Kbi Metal Co

Daou Data Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Daou Data Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daou Data sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Daou Data and Kbi Metal

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

The idea behind Daou Data Corp and Kbi Metal 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.