Correlation Between KC Metalsheet and RB Food

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

Diversification Opportunities for KC Metalsheet and RB Food

0.75

Correlation Coefficient

KC Metalsheet  RB Food

Poor diversification

The 3 months correlation between KCM and RBF is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding KC Metalsheet Public and RB Food Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RB Food Supply 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 RB Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RB Food Supply has no effect on the direction of KC Metalsheet i.e., KC Metalsheet and RB Food go up and down completely randomly.

Pair Corralation between KC Metalsheet and RB Food

Assuming the 90 days trading horizon KC Metalsheet is expected to generate 1.01 times less return on investment than RB Food. In addition to that, KC Metalsheet is 1.0 times more volatile than RB Food Supply. It trades about 0.13 of its total potential returns per unit of risk. RB Food Supply is currently generating about 0.13 per unit of volatility. If you would invest  0.00  in RB Food Supply on September 3, 2024 and sell it today you would earn a total of  680.00  from holding RB Food Supply or generate 9.223372036854776E16% return on investment over 90 days.

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

KC Metalsheet Public  vs.  RB Food Supply

KC Metalsheet Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KC Metalsheet Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak primary indicators, KC Metalsheet disclosed solid returns over the last few months and may actually be approaching a breakup point.

RB Food Supply

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RB Food Supply are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, RB Food disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KC Metalsheet and RB Food

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

The idea behind KC Metalsheet Public and RB Food Supply 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.