Correlation Between TRAINLINE PLC and KINGBOARD CHEMICAL
Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC and KINGBOARD 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 TRAINLINE PLC and KINGBOARD CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAINLINE PLC LS and KINGBOARD CHEMICAL, you can compare the effects of market volatilities on TRAINLINE PLC and KINGBOARD 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 TRAINLINE PLC with a short position of KINGBOARD CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and KINGBOARD CHEMICAL.
Diversification Opportunities for TRAINLINE PLC and KINGBOARD CHEMICAL
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between TRAINLINE and KINGBOARD is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and KINGBOARD CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGBOARD CHEMICAL and TRAINLINE PLC 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 TRAINLINE PLC LS are associated (or correlated) with KINGBOARD CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINGBOARD CHEMICAL has no effect on the direction of TRAINLINE PLC i.e., TRAINLINE PLC and KINGBOARD CHEMICAL go up and down completely randomly.
Pair Corralation between TRAINLINE PLC and KINGBOARD CHEMICAL
Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to under-perform the KINGBOARD CHEMICAL. In addition to that, TRAINLINE PLC is 1.7 times more volatile than KINGBOARD CHEMICAL. It trades about -0.22 of its total potential returns per unit of risk. KINGBOARD CHEMICAL is currently generating about 0.32 per unit of volatility. If you would invest 224.00 in KINGBOARD CHEMICAL on October 28, 2024 and sell it today you would earn a total of 32.00 from holding KINGBOARD CHEMICAL or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRAINLINE PLC LS vs. KINGBOARD CHEMICAL
Performance |
| Timeline |
| TRAINLINE PLC LS |
| KINGBOARD CHEMICAL |
TRAINLINE PLC and KINGBOARD CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRAINLINE PLC and KINGBOARD CHEMICAL
The main advantage of trading using opposite TRAINLINE PLC and KINGBOARD CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC position performs unexpectedly, KINGBOARD 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 KINGBOARD CHEMICAL will offset losses from the drop in KINGBOARD CHEMICAL's long position.| TRAINLINE PLC vs. LPKF Laser Electronics | TRAINLINE PLC vs. TOREX SEMICONDUCTOR LTD | TRAINLINE PLC vs. Nordic Semiconductor ASA | TRAINLINE PLC vs. ON SEMICONDUCTOR |
| KINGBOARD CHEMICAL vs. SAFEROADS HLDGS | KINGBOARD CHEMICAL vs. EVS Broadcast Equipment | KINGBOARD CHEMICAL vs. Liberty Broadband | KINGBOARD CHEMICAL vs. TRAINLINE PLC LS |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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