Correlation Between Daikin IndustriesLtd and Kingspan Group
Can any of the company-specific risk be diversified away by investing in both Daikin IndustriesLtd and Kingspan 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 Daikin IndustriesLtd and Kingspan Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daikin IndustriesLtd and Kingspan Group PLC, you can compare the effects of market volatilities on Daikin IndustriesLtd and Kingspan 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 Daikin IndustriesLtd with a short position of Kingspan Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daikin IndustriesLtd and Kingspan Group.
Diversification Opportunities for Daikin IndustriesLtd and Kingspan Group
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Daikin and Kingspan is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Daikin IndustriesLtd and Kingspan Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingspan Group PLC and Daikin IndustriesLtd 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 Daikin IndustriesLtd are associated (or correlated) with Kingspan Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingspan Group PLC has no effect on the direction of Daikin IndustriesLtd i.e., Daikin IndustriesLtd and Kingspan Group go up and down completely randomly.
Pair Corralation between Daikin IndustriesLtd and Kingspan Group
Assuming the 90 days horizon Daikin IndustriesLtd is expected to generate 7.61 times less return on investment than Kingspan Group. In addition to that, Daikin IndustriesLtd is 1.45 times more volatile than Kingspan Group PLC. It trades about 0.0 of its total potential returns per unit of risk. Kingspan Group PLC is currently generating about 0.04 per unit of volatility. If you would invest 5,774 in Kingspan Group PLC on August 28, 2024 and sell it today you would earn a total of 1,973 from holding Kingspan Group PLC or generate 34.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Daikin IndustriesLtd vs. Kingspan Group PLC
Performance |
Timeline |
Daikin IndustriesLtd |
Kingspan Group PLC |
Daikin IndustriesLtd and Kingspan Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Daikin IndustriesLtd and Kingspan Group
The main advantage of trading using opposite Daikin IndustriesLtd and Kingspan Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daikin IndustriesLtd position performs unexpectedly, Kingspan 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 Kingspan Group will offset losses from the drop in Kingspan Group's long position.Daikin IndustriesLtd vs. Trane Technologies plc | Daikin IndustriesLtd vs. Carrier Global Corp | Daikin IndustriesLtd vs. Johnson Controls International | Daikin IndustriesLtd vs. Lennox International |
Kingspan Group vs. Trane Technologies plc | Kingspan Group vs. Carrier Global Corp | Kingspan Group vs. Johnson Controls International | Kingspan Group vs. Lennox International |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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