Correlation Between Cairn Homes and Kenmare Resources
Can any of the company-specific risk be diversified away by investing in both Cairn Homes and Kenmare Resources 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 Kenmare Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairn Homes PLC and Kenmare Resources PLC, you can compare the effects of market volatilities on Cairn Homes and Kenmare Resources 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 Kenmare Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and Kenmare Resources.
Diversification Opportunities for Cairn Homes and Kenmare Resources
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cairn and Kenmare is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes PLC and Kenmare Resources PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenmare Resources PLC 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 PLC are associated (or correlated) with Kenmare Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenmare Resources PLC has no effect on the direction of Cairn Homes i.e., Cairn Homes and Kenmare Resources go up and down completely randomly.
Pair Corralation between Cairn Homes and Kenmare Resources
Assuming the 90 days trading horizon Cairn Homes PLC is expected to under-perform the Kenmare Resources. In addition to that, Cairn Homes is 1.08 times more volatile than Kenmare Resources PLC. It trades about -0.15 of its total potential returns per unit of risk. Kenmare Resources PLC is currently generating about 0.06 per unit of volatility. If you would invest 424.00 in Kenmare Resources PLC on August 30, 2024 and sell it today you would earn a total of 8.00 from holding Kenmare Resources PLC or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairn Homes PLC vs. Kenmare Resources PLC
Performance |
| Timeline |
| Cairn Homes PLC |
| Kenmare Resources PLC |
Cairn Homes and Kenmare Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and Kenmare Resources
The main advantage of trading using opposite Cairn Homes and Kenmare Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes position performs unexpectedly, Kenmare Resources 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 Kenmare Resources will offset losses from the drop in Kenmare Resources' long position.| Cairn Homes vs. Dalata Hotel Group | Cairn Homes vs. AIB Group PLC | Cairn Homes vs. Irish Residential Properties | Cairn Homes vs. Bank of Ireland |
| Kenmare Resources vs. AIB Group PLC | Kenmare Resources vs. Dalata Hotel Group | Kenmare Resources vs. Uniphar Group PLC | Kenmare Resources vs. Greencoat Renewables PLC |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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