Correlation Between CAIRN HOMES and KINGBOARD CHEMICAL
Can any of the company-specific risk be diversified away by investing in both CAIRN HOMES and KINGBOARD CHEMICAL 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 CAIRN HOMES and KINGBOARD CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAIRN HOMES EO and KINGBOARD CHEMICAL, you can compare the effects of market volatilities on CAIRN HOMES and KINGBOARD CHEMICAL 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 CAIRN HOMES with a short position of KINGBOARD CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAIRN HOMES and KINGBOARD CHEMICAL.
Diversification Opportunities for CAIRN HOMES and KINGBOARD CHEMICAL
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CAIRN and KINGBOARD is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding CAIRN HOMES EO and KINGBOARD CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGBOARD CHEMICAL and CAIRN HOMES 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 CAIRN HOMES EO are associated (or correlated) with KINGBOARD CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINGBOARD CHEMICAL has no effect on the direction of CAIRN HOMES i.e., CAIRN HOMES and KINGBOARD CHEMICAL go up and down completely randomly.
Pair Corralation between CAIRN HOMES and KINGBOARD CHEMICAL
Assuming the 90 days horizon CAIRN HOMES EO is expected to under-perform the KINGBOARD CHEMICAL. In addition to that, CAIRN HOMES is 1.05 times more volatile than KINGBOARD CHEMICAL. It trades about -0.04 of its total potential returns per unit of risk. KINGBOARD CHEMICAL is currently generating about 0.2 per unit of volatility. If you would invest 224.00 in KINGBOARD CHEMICAL on October 16, 2024 and sell it today you would earn a total of 16.00 from holding KINGBOARD CHEMICAL or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.12% |
| Values | Daily Returns |
CAIRN HOMES EO vs. KINGBOARD CHEMICAL
Performance |
| Timeline |
| CAIRN HOMES EO |
| KINGBOARD CHEMICAL |
CAIRN HOMES and KINGBOARD CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAIRN HOMES and KINGBOARD CHEMICAL
The main advantage of trading using opposite CAIRN HOMES and KINGBOARD CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAIRN HOMES position performs unexpectedly, KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL will offset losses from the drop in KINGBOARD CHEMICAL's long position.| CAIRN HOMES vs. H2O Retailing | CAIRN HOMES vs. SALESFORCE INC CDR | CAIRN HOMES vs. Salesforce | CAIRN HOMES vs. The Trade Desk |
| KINGBOARD CHEMICAL vs. IMPERIAL TOBACCO | KINGBOARD CHEMICAL vs. CAIRN HOMES EO | KINGBOARD CHEMICAL vs. CarsalesCom | KINGBOARD CHEMICAL vs. OFFICE DEPOT |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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