Correlation Between Carlton Investments and WA Kaolin
Can any of the company-specific risk be diversified away by investing in both Carlton Investments and WA Kaolin 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 Carlton Investments and WA Kaolin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlton Investments and WA Kaolin, you can compare the effects of market volatilities on Carlton Investments and WA Kaolin 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 Carlton Investments with a short position of WA Kaolin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlton Investments and WA Kaolin.
Diversification Opportunities for Carlton Investments and WA Kaolin
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carlton and WAK is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Carlton Investments and WA Kaolin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WA Kaolin and Carlton Investments 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 Carlton Investments are associated (or correlated) with WA Kaolin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WA Kaolin has no effect on the direction of Carlton Investments i.e., Carlton Investments and WA Kaolin go up and down completely randomly.
Pair Corralation between Carlton Investments and WA Kaolin
Assuming the 90 days trading horizon Carlton Investments is expected to generate 0.18 times more return on investment than WA Kaolin. However, Carlton Investments is 5.49 times less risky than WA Kaolin. It trades about 0.04 of its potential returns per unit of risk. WA Kaolin is currently generating about -0.03 per unit of risk. If you would invest 2,773 in Carlton Investments on September 12, 2024 and sell it today you would earn a total of 302.00 from holding Carlton Investments or generate 10.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carlton Investments vs. WA Kaolin
Performance |
| Timeline |
| Carlton Investments |
| WA Kaolin |
Carlton Investments and WA Kaolin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlton Investments and WA Kaolin
The main advantage of trading using opposite Carlton Investments and WA Kaolin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlton Investments position performs unexpectedly, WA Kaolin 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 WA Kaolin will offset losses from the drop in WA Kaolin's long position.| Carlton Investments vs. GQG Partners DRC | Carlton Investments vs. MFF Capital Investments | Carlton Investments vs. Wam Capital | Carlton Investments vs. Wam Leaders |
| WA Kaolin vs. Nine Entertainment Co | WA Kaolin vs. Kneomedia | WA Kaolin vs. Carlton Investments | WA Kaolin vs. REGAL ASIAN 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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