Correlation Between Kukil Metal and Raontech

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

Diversification Opportunities for Kukil Metal and Raontech

0.4

Correlation Coefficient

Kukil Metal  Raontech

Very weak diversification

The 3 months correlation between Kukil and Raontech is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Kukil Metal Co and Raontech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raontech 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 Raontech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raontech has no effect on the direction of Kukil Metal i.e., Kukil Metal and Raontech go up and down completely randomly.

Pair Corralation between Kukil Metal and Raontech

Assuming the 90 days trading horizon Kukil Metal Co is expected to generate 0.33 times more return on investment than Raontech. However, Kukil Metal Co is 3.0 times less risky than Raontech. It trades about 0.03 of its potential returns per unit of risk. Raontech is currently generating about -0.16 per unit of risk. If you would invest  166,100  in Kukil Metal Co on December 25, 2024 and sell it today you would earn a total of  2,700  from holding Kukil Metal Co or generate 1.63% return on investment over 90 days.

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

Kukil Metal Co  vs.  Raontech

Kukil Metal

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kukil Metal Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kukil Metal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Raontech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Raontech 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 Kukil Metal and Raontech

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

The idea behind Kukil Metal Co and Raontech 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.