Correlation Between Histeel and Kbi Metal
Can any of the company-specific risk be diversified away by investing in both Histeel 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 Histeel and Kbi Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Histeel and Kbi Metal Co, you can compare the effects of market volatilities on Histeel 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 Histeel with a short position of Kbi Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Histeel and Kbi Metal.
Diversification Opportunities for Histeel and Kbi Metal
Very poor diversification
The 3 months correlation between Histeel and Kbi is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Histeel and Kbi Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kbi Metal and Histeel 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 Histeel 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 Histeel i.e., Histeel and Kbi Metal go up and down completely randomly.
Pair Corralation between Histeel and Kbi Metal
Assuming the 90 days trading horizon Histeel is expected to generate 37.31 times less return on investment than Kbi Metal. But when comparing it to its historical volatility, Histeel is 1.53 times less risky than Kbi Metal. It trades about 0.0 of its potential returns per unit of risk. Kbi Metal Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 147,500 in Kbi Metal Co on September 25, 2024 and sell it today you would earn a total of 57,000 from holding Kbi Metal Co or generate 38.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Histeel vs. Kbi Metal Co
Performance |
Timeline |
Histeel |
Kbi Metal |
Histeel and Kbi Metal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Histeel and Kbi Metal
The main advantage of trading using opposite Histeel and Kbi Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Histeel 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.Histeel vs. LG Chemicals | Histeel vs. POSCO Holdings | Histeel vs. Hanwha Solutions | Histeel vs. Lotte Chemical Corp |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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