Correlation Between CAE and Kion Group
Can any of the company-specific risk be diversified away by investing in both CAE and Kion Group 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 CAE and Kion Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAE Inc and Kion Group AG, you can compare the effects of market volatilities on CAE and Kion Group 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 CAE with a short position of Kion Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAE and Kion Group.
Diversification Opportunities for CAE and Kion Group
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CAE and Kion is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding CAE Inc and Kion Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kion Group AG and CAE 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 CAE Inc are associated (or correlated) with Kion Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kion Group AG has no effect on the direction of CAE i.e., CAE and Kion Group go up and down completely randomly.
Pair Corralation between CAE and Kion Group
Considering the 90-day investment horizon CAE Inc is expected to generate 0.83 times more return on investment than Kion Group. However, CAE Inc is 1.2 times less risky than Kion Group. It trades about 0.2 of its potential returns per unit of risk. Kion Group AG is currently generating about 0.05 per unit of risk. If you would invest 1,818 in CAE Inc on September 12, 2024 and sell it today you would earn a total of 515.00 from holding CAE Inc or generate 28.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAE Inc vs. Kion Group AG
Performance |
| Timeline |
| CAE Inc |
| Kion Group AG |
CAE and Kion Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAE and Kion Group
The main advantage of trading using opposite CAE and Kion Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAE position performs unexpectedly, Kion Group 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 Kion Group will offset losses from the drop in Kion Group's long position.The idea behind CAE Inc and Kion Group AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kion Group vs. Rev Group | Kion Group vs. Gencor Industries | Kion Group vs. Alamo Group | Kion Group vs. Wabash National |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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