Correlation Between KPX Green and Nable Communications
Can any of the company-specific risk be diversified away by investing in both KPX Green and Nable Communications 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 KPX Green and Nable Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KPX Green Chemical and Nable Communications, you can compare the effects of market volatilities on KPX Green and Nable Communications 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 KPX Green with a short position of Nable Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of KPX Green and Nable Communications.
Diversification Opportunities for KPX Green and Nable Communications
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KPX and Nable is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding KPX Green Chemical and Nable Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nable Communications and KPX Green 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 KPX Green Chemical are associated (or correlated) with Nable Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nable Communications has no effect on the direction of KPX Green i.e., KPX Green and Nable Communications go up and down completely randomly.
Pair Corralation between KPX Green and Nable Communications
Assuming the 90 days trading horizon KPX Green Chemical is expected to generate 3.54 times more return on investment than Nable Communications. However, KPX Green is 3.54 times more volatile than Nable Communications. It trades about 0.3 of its potential returns per unit of risk. Nable Communications is currently generating about 0.1 per unit of risk. If you would invest 495,000 in KPX Green Chemical on September 24, 2024 and sell it today you would earn a total of 185,000 from holding KPX Green Chemical or generate 37.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
KPX Green Chemical vs. Nable Communications
Performance |
| Timeline |
| KPX Green Chemical |
| Nable Communications |
KPX Green and Nable Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KPX Green and Nable Communications
The main advantage of trading using opposite KPX Green and Nable Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KPX Green position performs unexpectedly, Nable Communications 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 Nable Communications will offset losses from the drop in Nable Communications' long position.| KPX Green vs. Insung Information Co | KPX Green vs. Shinsegae Information Communication | KPX Green vs. Nice Information Telecommunication | KPX Green vs. Koryo Credit Information |
| Nable Communications vs. Eagon Industrial Co | Nable Communications vs. MetaLabs Co | Nable Communications vs. Kukil Metal Co | Nable Communications vs. Heungkuk Metaltech CoLtd |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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