Correlation Between Dragonfly and Kmw
Can any of the company-specific risk be diversified away by investing in both Dragonfly and Kmw 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 Dragonfly and Kmw into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dragonfly GF Co and Kmw Inc, you can compare the effects of market volatilities on Dragonfly and Kmw 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 Dragonfly with a short position of Kmw. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dragonfly and Kmw.
Diversification Opportunities for Dragonfly and Kmw
Very good diversification
The 3 months correlation between Dragonfly and Kmw is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dragonfly GF Co and Kmw Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kmw Inc and Dragonfly 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 Dragonfly GF Co are associated (or correlated) with Kmw. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kmw Inc has no effect on the direction of Dragonfly i.e., Dragonfly and Kmw go up and down completely randomly.
Pair Corralation between Dragonfly and Kmw
Assuming the 90 days trading horizon Dragonfly GF Co is expected to under-perform the Kmw. In addition to that, Dragonfly is 1.55 times more volatile than Kmw Inc. It trades about -0.08 of its total potential returns per unit of risk. Kmw Inc is currently generating about -0.12 per unit of volatility. If you would invest 1,480,000 in Kmw Inc on September 3, 2024 and sell it today you would lose (635,000) from holding Kmw Inc or give up 42.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 87.6% |
| Values | Daily Returns |
Dragonfly GF Co vs. Kmw Inc
Performance |
| Timeline |
| Dragonfly GF |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kmw Inc |
Dragonfly and Kmw Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dragonfly and Kmw
The main advantage of trading using opposite Dragonfly and Kmw positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dragonfly position performs unexpectedly, Kmw 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 Kmw will offset losses from the drop in Kmw's long position.| Dragonfly vs. Samsung Electronics Co | Dragonfly vs. Samsung Electronics Co | Dragonfly vs. LG Energy Solution | Dragonfly vs. SK Hynix |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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