Correlation Between Kbi Metal and ASTORY CoLtd

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

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

Diversification Opportunities for Kbi Metal and ASTORY CoLtd

-0.42

Correlation Coefficient

Kbi Metal  ASTORY CoLtd

Very good diversification

The 3 months correlation between Kbi and ASTORY is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal Co and ASTORY CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASTORY CoLtd and Kbi 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 Kbi Metal Co are associated (or correlated) with ASTORY CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASTORY CoLtd has no effect on the direction of Kbi Metal i.e., Kbi Metal and ASTORY CoLtd go up and down completely randomly.

Pair Corralation between Kbi Metal and ASTORY CoLtd

Assuming the 90 days trading horizon Kbi Metal Co is expected to generate 2.3 times more return on investment than ASTORY CoLtd. However, Kbi Metal is 2.3 times more volatile than ASTORY CoLtd. It trades about 0.05 of its potential returns per unit of risk. ASTORY CoLtd is currently generating about -0.08 per unit of risk. If you would invest  140,400  in Kbi Metal Co on September 13, 2024 and sell it today you would earn a total of  53,300  from holding Kbi Metal Co or generate 37.96% return on investment over 90 days.

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

Kbi Metal Co  vs.  ASTORY CoLtd

Kbi Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kbi Metal Co 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ASTORY CoLtd

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Kbi Metal and ASTORY CoLtd

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

The idea behind Kbi Metal Co and ASTORY CoLtd 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.