Correlation Between XAC Automation and Kaulin Mfg
Can any of the company-specific risk be diversified away by investing in both XAC Automation and Kaulin Mfg 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 XAC Automation and Kaulin Mfg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XAC Automation and Kaulin Mfg, you can compare the effects of market volatilities on XAC Automation and Kaulin Mfg 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 XAC Automation with a short position of Kaulin Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of XAC Automation and Kaulin Mfg.
Diversification Opportunities for XAC Automation and Kaulin Mfg
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between XAC and Kaulin is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding XAC Automation and Kaulin Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaulin Mfg and XAC Automation 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 XAC Automation are associated (or correlated) with Kaulin Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaulin Mfg has no effect on the direction of XAC Automation i.e., XAC Automation and Kaulin Mfg go up and down completely randomly.
Pair Corralation between XAC Automation and Kaulin Mfg
Assuming the 90 days trading horizon XAC Automation is expected to generate 7.06 times less return on investment than Kaulin Mfg. But when comparing it to its historical volatility, XAC Automation is 1.85 times less risky than Kaulin Mfg. It trades about 0.05 of its potential returns per unit of risk. Kaulin Mfg is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,470 in Kaulin Mfg on September 2, 2024 and sell it today you would earn a total of 255.00 from holding Kaulin Mfg or generate 17.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
XAC Automation vs. Kaulin Mfg
Performance |
| Timeline |
| XAC Automation |
| Kaulin Mfg |
XAC Automation and Kaulin Mfg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XAC Automation and Kaulin Mfg
The main advantage of trading using opposite XAC Automation and Kaulin Mfg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XAC Automation position performs unexpectedly, Kaulin Mfg 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 Kaulin Mfg will offset losses from the drop in Kaulin Mfg's long position.The idea behind XAC Automation and Kaulin Mfg 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.| Kaulin Mfg vs. BES Engineering Co | Kaulin Mfg vs. Continental Holdings Corp | Kaulin Mfg vs. Kee Tai Properties | Kaulin Mfg vs. Hung Sheng Construction |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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