Correlation Between Kukil Metal and GiantStep

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

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

Diversification Opportunities for Kukil Metal and GiantStep

0.85

Correlation Coefficient

Kukil Metal  GiantStep

Very poor diversification

The 3 months correlation between Kukil and GiantStep is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Kukil Metal Co and GiantStep Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GiantStep and Kukil 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 Kukil Metal Co are associated (or correlated) with GiantStep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GiantStep has no effect on the direction of Kukil Metal i.e., Kukil Metal and GiantStep go up and down completely randomly.

Pair Corralation between Kukil Metal and GiantStep

Assuming the 90 days trading horizon Kukil Metal Co is expected to generate 1.06 times more return on investment than GiantStep. However, Kukil Metal is 1.06 times more volatile than GiantStep Co. It trades about 0.0 of its potential returns per unit of risk. GiantStep Co is currently generating about -0.04 per unit of risk. If you would invest  263,653  in Kukil Metal Co on October 11, 2024 and sell it today you would lose (90,653) from holding Kukil Metal Co or give up 34.38% of portfolio value over 90 days.

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

Kukil Metal Co  vs.  GiantStep Co

Kukil Metal

Risk-Adjusted Performance

0 of 100

Very Weak

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

GiantStep

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GiantStep Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Kukil Metal and GiantStep

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

The idea behind Kukil Metal Co and GiantStep 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.