Correlation Between King-Strong New and GRIPM Advanced

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

Diversification Opportunities for King-Strong New and GRIPM Advanced

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between King-Strong and GRIPM is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding King Strong New Material and GRIPM Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRIPM Advanced Materials and King-Strong New 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 King Strong New Material are associated (or correlated) with GRIPM Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRIPM Advanced Materials has no effect on the direction of King-Strong New i.e., King-Strong New and GRIPM Advanced go up and down completely randomly.

Pair Corralation between King-Strong New and GRIPM Advanced

Assuming the 90 days trading horizon King Strong New Material is expected to generate 0.94 times more return on investment than GRIPM Advanced. However, King Strong New Material is 1.06 times less risky than GRIPM Advanced. It trades about 0.03 of its potential returns per unit of risk. GRIPM Advanced Materials is currently generating about 0.02 per unit of risk. If you would invest  1,957  in King Strong New Material on August 31, 2024 and sell it today you would earn a total of  423.00  from holding King Strong New Material or generate 21.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.72%
ValuesDaily Returns

King Strong New Material  vs.  GRIPM Advanced Materials

 Performance 
       Timeline  
King Strong New 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in King Strong New Material are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, King-Strong New sustained solid returns over the last few months and may actually be approaching a breakup point.
GRIPM Advanced Materials 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in GRIPM Advanced Materials are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GRIPM Advanced may actually be approaching a critical reversion point that can send shares even higher in December 2024.

King-Strong New and GRIPM Advanced Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with King-Strong New and GRIPM Advanced

The main advantage of trading using opposite King-Strong New and GRIPM Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if King-Strong New position performs unexpectedly, GRIPM Advanced 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 GRIPM Advanced will offset losses from the drop in GRIPM Advanced's long position.
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The idea behind King Strong New Material and GRIPM Advanced Materials 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.
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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