Correlation Between Global Standard and Kukil Metal

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

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

Diversification Opportunities for Global Standard and Kukil Metal

0.5

Correlation Coefficient

Global Standard  Kukil Metal

Very weak diversification

The 3 months correlation between Global and Kukil is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Global Standard Technology and Kukil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukil Metal and Global Standard 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 Global Standard Technology are associated (or correlated) with Kukil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukil Metal has no effect on the direction of Global Standard i.e., Global Standard and Kukil Metal go up and down completely randomly.

Pair Corralation between Global Standard and Kukil Metal

Assuming the 90 days trading horizon Global Standard Technology is expected to generate 2.0 times more return on investment than Kukil Metal. However, Global Standard is 2.0 times more volatile than Kukil Metal Co. It trades about 0.06 of its potential returns per unit of risk. Kukil Metal Co is currently generating about -0.12 per unit of risk. If you would invest  1,450,000  in Global Standard Technology on September 20, 2024 and sell it today you would earn a total of  147,000  from holding Global Standard Technology or generate 10.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Global Standard Technology  vs.  Kukil Metal Co

Global Standard Tech

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Standard Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Global Standard sustained solid returns over the last few months and may actually be approaching a breakup point.

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 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 Global Standard and Kukil Metal

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

The idea behind Global Standard Technology and Kukil 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..