Correlation Between Capital Tip and Kinko Optical
Can any of the company-specific risk be diversified away by investing in both Capital Tip and Kinko Optical 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 Capital Tip and Kinko Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Tip Customized and Kinko Optical Co, you can compare the effects of market volatilities on Capital Tip and Kinko Optical 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 Capital Tip with a short position of Kinko Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Tip and Kinko Optical.
Diversification Opportunities for Capital Tip and Kinko Optical
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and Kinko is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Capital Tip Customized and Kinko Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinko Optical and Capital Tip 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 Capital Tip Customized are associated (or correlated) with Kinko Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinko Optical has no effect on the direction of Capital Tip i.e., Capital Tip and Kinko Optical go up and down completely randomly.
Pair Corralation between Capital Tip and Kinko Optical
Assuming the 90 days trading horizon Capital Tip Customized is expected to generate 0.5 times more return on investment than Kinko Optical. However, Capital Tip Customized is 2.01 times less risky than Kinko Optical. It trades about 0.06 of its potential returns per unit of risk. Kinko Optical Co is currently generating about -0.13 per unit of risk. If you would invest 2,230 in Capital Tip Customized on November 6, 2024 and sell it today you would earn a total of 21.00 from holding Capital Tip Customized or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Tip Customized vs. Kinko Optical Co
Performance |
| Timeline |
| Capital Tip Customized |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Kinko Optical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Capital Tip and Kinko Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Tip and Kinko Optical
The main advantage of trading using opposite Capital Tip and Kinko Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Tip position performs unexpectedly, Kinko Optical 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 Kinko Optical will offset losses from the drop in Kinko Optical's long position.The idea behind Capital Tip Customized and Kinko Optical 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.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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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