Correlation Between Stic Investments and Kukdo Chemical

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Can any of the company-specific risk be diversified away by investing in both Stic Investments and Kukdo Chemical 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 Stic Investments and Kukdo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stic Investments and Kukdo Chemical, you can compare the effects of market volatilities on Stic Investments and Kukdo Chemical 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 Stic Investments with a short position of Kukdo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stic Investments and Kukdo Chemical.

Diversification Opportunities for Stic Investments and Kukdo Chemical

-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between Stic and Kukdo is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Stic Investments and Kukdo Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdo Chemical and Stic Investments 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 Stic Investments are associated (or correlated) with Kukdo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdo Chemical has no effect on the direction of Stic Investments i.e., Stic Investments and Kukdo Chemical go up and down completely randomly.

Pair Corralation between Stic Investments and Kukdo Chemical

Assuming the 90 days trading horizon Stic Investments is expected to generate 1.04 times more return on investment than Kukdo Chemical. However, Stic Investments is 1.04 times more volatile than Kukdo Chemical. It trades about 0.4 of its potential returns per unit of risk. Kukdo Chemical is currently generating about -0.08 per unit of risk. If you would invest  741,000  in Stic Investments on September 15, 2024 and sell it today you would earn a total of  132,000  from holding Stic Investments or generate 17.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Stic Investments  vs.  Kukdo Chemical

 Performance 
       Timeline  
Stic Investments 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Stic Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Stic Investments may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Kukdo Chemical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kukdo Chemical 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.

Stic Investments and Kukdo Chemical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Stic Investments and Kukdo Chemical

The main advantage of trading using opposite Stic Investments and Kukdo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stic Investments position performs unexpectedly, Kukdo Chemical 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 Kukdo Chemical will offset losses from the drop in Kukdo Chemical's long position.
The idea behind Stic Investments and Kukdo Chemical 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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