Correlation Between Eagle Materials and Kirin Holdings
Can any of the company-specific risk be diversified away by investing in both Eagle Materials and Kirin Holdings 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 Eagle Materials and Kirin Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Materials and Kirin Holdings, you can compare the effects of market volatilities on Eagle Materials and Kirin Holdings 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 Eagle Materials with a short position of Kirin Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and Kirin Holdings.
Diversification Opportunities for Eagle Materials and Kirin Holdings
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eagle and Kirin is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and Kirin Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirin Holdings and Eagle Materials 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 Eagle Materials are associated (or correlated) with Kirin Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirin Holdings has no effect on the direction of Eagle Materials i.e., Eagle Materials and Kirin Holdings go up and down completely randomly.
Pair Corralation between Eagle Materials and Kirin Holdings
Assuming the 90 days horizon Eagle Materials is expected to generate 1.23 times more return on investment than Kirin Holdings. However, Eagle Materials is 1.23 times more volatile than Kirin Holdings. It trades about 0.25 of its potential returns per unit of risk. Kirin Holdings is currently generating about -0.1 per unit of risk. If you would invest 26,000 in Eagle Materials on September 1, 2024 and sell it today you would earn a total of 2,800 from holding Eagle Materials or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Materials vs. Kirin Holdings
Performance |
| Timeline |
| Eagle Materials |
| Kirin Holdings |
Eagle Materials and Kirin Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Materials and Kirin Holdings
The main advantage of trading using opposite Eagle Materials and Kirin Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials position performs unexpectedly, Kirin Holdings 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 Kirin Holdings will offset losses from the drop in Kirin Holdings' long position.| Eagle Materials vs. AUST AGRICULTURAL | Eagle Materials vs. Daito Trust Construction | Eagle Materials vs. Granite Construction | Eagle Materials vs. ePlay Digital |
| Kirin Holdings vs. Mitsubishi Materials | Kirin Holdings vs. Eagle Materials | Kirin Holdings vs. Methode Electronics | Kirin Holdings vs. Nucletron Electronic Aktiengesellschaft |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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