Correlation Between Capri Holdings and KH Group
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and KH 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 Capri Holdings and KH Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and KH Group Oyj, you can compare the effects of market volatilities on Capri Holdings and KH 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 Capri Holdings with a short position of KH Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and KH Group.
Diversification Opportunities for Capri Holdings and KH Group
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capri and KHG is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and KH Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KH Group Oyj and Capri Holdings 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 Capri Holdings are associated (or correlated) with KH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KH Group Oyj has no effect on the direction of Capri Holdings i.e., Capri Holdings and KH Group go up and down completely randomly.
Pair Corralation between Capri Holdings and KH Group
Given the investment horizon of 90 days Capri Holdings is expected to generate 49.53 times less return on investment than KH Group. But when comparing it to its historical volatility, Capri Holdings is 61.27 times less risky than KH Group. It trades about 0.26 of its potential returns per unit of risk. KH Group Oyj is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 58.00 in KH Group Oyj on September 1, 2024 and sell it today you would earn a total of 10,029 from holding KH Group Oyj or generate 17291.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Capri Holdings vs. KH Group Oyj
Performance |
| Timeline |
| Capri Holdings |
| KH Group Oyj |
Capri Holdings and KH Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and KH Group
The main advantage of trading using opposite Capri Holdings and KH Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, KH 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 KH Group will offset losses from the drop in KH Group's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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