Correlation Between KC Metalsheet and Dexon Technology

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

By analyzing existing cross correlation between KC Metalsheet Public and Dexon Technology PCL, you can compare the effects of market volatilities on KC Metalsheet and Dexon Technology 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 KC Metalsheet with a short position of Dexon Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of KC Metalsheet and Dexon Technology.

Diversification Opportunities for KC Metalsheet and Dexon Technology

0.7

Correlation Coefficient

KC Metalsheet  Dexon Technology

Poor diversification

The 3 months correlation between KCM and Dexon is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding KC Metalsheet Public and Dexon Technology PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexon Technology PCL and KC Metalsheet 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 KC Metalsheet Public are associated (or correlated) with Dexon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexon Technology PCL has no effect on the direction of KC Metalsheet i.e., KC Metalsheet and Dexon Technology go up and down completely randomly.

Pair Corralation between KC Metalsheet and Dexon Technology

Assuming the 90 days trading horizon KC Metalsheet is expected to generate 1.08 times less return on investment than Dexon Technology. But when comparing it to its historical volatility, KC Metalsheet Public is 1.04 times less risky than Dexon Technology. It trades about 0.04 of its potential returns per unit of risk. Dexon Technology PCL is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  451.00  in Dexon Technology PCL on October 24, 2024 and sell it today you would lose (302.00) from holding Dexon Technology PCL or give up 66.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	91.65%
Values	Daily Returns

KC Metalsheet Public  vs.  Dexon Technology PCL

KC Metalsheet Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KC Metalsheet Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Dexon Technology PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dexon Technology PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers 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 KC Metalsheet and Dexon Technology

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

The idea behind KC Metalsheet Public and Dexon Technology PCL 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.