Correlation Between Dis Chem and Kap Industrial
Can any of the company-specific risk be diversified away by investing in both Dis Chem and Kap Industrial 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 Dis Chem and Kap Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dis Chem Pharmacies and Kap Industrial Holdings, you can compare the effects of market volatilities on Dis Chem and Kap Industrial 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 Dis Chem with a short position of Kap Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dis Chem and Kap Industrial.
Diversification Opportunities for Dis Chem and Kap Industrial
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dis and Kap is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dis Chem Pharmacies and Kap Industrial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kap Industrial Holdings and Dis Chem 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 Dis Chem Pharmacies are associated (or correlated) with Kap Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kap Industrial Holdings has no effect on the direction of Dis Chem i.e., Dis Chem and Kap Industrial go up and down completely randomly.
Pair Corralation between Dis Chem and Kap Industrial
Assuming the 90 days trading horizon Dis Chem Pharmacies is expected to generate 0.64 times more return on investment than Kap Industrial. However, Dis Chem Pharmacies is 1.55 times less risky than Kap Industrial. It trades about 0.06 of its potential returns per unit of risk. Kap Industrial Holdings is currently generating about -0.22 per unit of risk. If you would invest 364,334 in Dis Chem Pharmacies on August 28, 2024 and sell it today you would earn a total of 5,166 from holding Dis Chem Pharmacies or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dis Chem Pharmacies vs. Kap Industrial Holdings
Performance |
| Timeline |
| Dis Chem Pharmacies |
| Kap Industrial Holdings |
Dis Chem and Kap Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dis Chem and Kap Industrial
The main advantage of trading using opposite Dis Chem and Kap Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dis Chem position performs unexpectedly, Kap Industrial 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 Kap Industrial will offset losses from the drop in Kap Industrial's long position.| Dis Chem vs. Centaur Bci Balanced | Dis Chem vs. Sabvest Capital | Dis Chem vs. Growthpoint Properties | Dis Chem vs. Bowler Metcalf |
| Kap Industrial vs. ABSA Bank Limited | Kap Industrial vs. Astral Foods | Kap Industrial vs. Hosken Consolidated Investments | Kap Industrial vs. Trematon Capital 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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