Correlation Between British Amer and Kap Industrial
Can any of the company-specific risk be diversified away by investing in both British Amer and Kap Industrial 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 British Amer and Kap Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and Kap Industrial Holdings, you can compare the effects of market volatilities on British Amer and Kap Industrial 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 British Amer with a short position of Kap Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Kap Industrial.
Diversification Opportunities for British Amer and Kap Industrial
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between British and Kap is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Kap Industrial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kap Industrial Holdings and British Amer 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 British American Tobacco are associated (or correlated) with Kap Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kap Industrial Holdings has no effect on the direction of British Amer i.e., British Amer and Kap Industrial go up and down completely randomly.
Pair Corralation between British Amer and Kap Industrial
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.48 times more return on investment than Kap Industrial. However, British American Tobacco is 2.07 times less risky than Kap Industrial. It trades about 0.53 of its potential returns per unit of risk. Kap Industrial Holdings is currently generating about -0.04 per unit of risk. If you would invest 6,079,500 in British American Tobacco on August 31, 2024 and sell it today you would earn a total of 752,500 from holding British American Tobacco or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Kap Industrial Holdings
Performance |
| Timeline |
| British American Tobacco |
| Kap Industrial Holdings |
British Amer and Kap Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and Kap Industrial
The main advantage of trading using opposite British Amer and Kap Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Kap Industrial 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 Kap Industrial will offset losses from the drop in Kap Industrial's long position.| British Amer vs. Centaur Bci Balanced | British Amer vs. Sabvest Capital | British Amer vs. AfricaRhodium ETF | British Amer vs. Indexco Limited |
| Kap Industrial vs. HomeChoice Investments | Kap Industrial vs. Hosken Consolidated Investments | Kap Industrial vs. Astoria Investments | Kap Industrial vs. Trematon Capital Investments |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |