Correlation Between Collins Foods and Kronos Worldwide
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Kronos Worldwide 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 Collins Foods and Kronos Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods Limited and Kronos Worldwide, you can compare the effects of market volatilities on Collins Foods and Kronos Worldwide 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 Collins Foods with a short position of Kronos Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Kronos Worldwide.
Diversification Opportunities for Collins Foods and Kronos Worldwide
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Collins and Kronos is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods Limited and Kronos Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Worldwide and Collins Foods 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 Collins Foods Limited are associated (or correlated) with Kronos Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Worldwide has no effect on the direction of Collins Foods i.e., Collins Foods and Kronos Worldwide go up and down completely randomly.
Pair Corralation between Collins Foods and Kronos Worldwide
Assuming the 90 days horizon Collins Foods Limited is expected to generate 0.89 times more return on investment than Kronos Worldwide. However, Collins Foods Limited is 1.12 times less risky than Kronos Worldwide. It trades about -0.12 of its potential returns per unit of risk. Kronos Worldwide is currently generating about -0.22 per unit of risk. If you would invest 499.00 in Collins Foods Limited on September 13, 2024 and sell it today you would lose (25.00) from holding Collins Foods Limited or give up 5.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Collins Foods Limited vs. Kronos Worldwide
Performance |
| Timeline |
| Collins Foods Limited |
| Kronos Worldwide |
Collins Foods and Kronos Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Kronos Worldwide
The main advantage of trading using opposite Collins Foods and Kronos Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Kronos Worldwide 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 Kronos Worldwide will offset losses from the drop in Kronos Worldwide's long position.| Collins Foods vs. Starbucks | Collins Foods vs. Superior Plus Corp | Collins Foods vs. SIVERS SEMICONDUCTORS AB | Collins Foods vs. NorAm Drilling AS |
| Kronos Worldwide vs. X FAB Silicon Foundries | Kronos Worldwide vs. Soken Chemical Engineering | Kronos Worldwide vs. CosmoSteel Holdings Limited | Kronos Worldwide vs. AIR PRODCHEMICALS |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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