Correlation Between AdCapital and Kubota
Can any of the company-specific risk be diversified away by investing in both AdCapital and Kubota 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 AdCapital and Kubota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AdCapital AG and Kubota, you can compare the effects of market volatilities on AdCapital and Kubota 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 AdCapital with a short position of Kubota. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdCapital and Kubota.
Diversification Opportunities for AdCapital and Kubota
Very poor diversification
The 3 months correlation between AdCapital and Kubota is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding AdCapital AG and Kubota in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kubota and AdCapital 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 AdCapital AG are associated (or correlated) with Kubota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kubota has no effect on the direction of AdCapital i.e., AdCapital and Kubota go up and down completely randomly.
Pair Corralation between AdCapital and Kubota
Assuming the 90 days horizon AdCapital AG is expected to generate 2.08 times more return on investment than Kubota. However, AdCapital is 2.08 times more volatile than Kubota. It trades about 0.08 of its potential returns per unit of risk. Kubota is currently generating about -0.09 per unit of risk. If you would invest 159.00 in AdCapital AG on September 3, 2024 and sell it today you would earn a total of 63.00 from holding AdCapital AG or generate 39.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AdCapital AG vs. Kubota
Performance |
| Timeline |
| AdCapital AG |
| Kubota |
AdCapital and Kubota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AdCapital and Kubota
The main advantage of trading using opposite AdCapital and Kubota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdCapital position performs unexpectedly, Kubota 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 Kubota will offset losses from the drop in Kubota's long position.| AdCapital vs. Blackstone Group | AdCapital vs. BlackRock | AdCapital vs. The Bank of | AdCapital vs. Ameriprise Financial |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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