Correlation Between Falcon Oil and K3 Business
Can any of the company-specific risk be diversified away by investing in both Falcon Oil and K3 Business 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 Falcon Oil and K3 Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Oil Gas and K3 Business Technology, you can compare the effects of market volatilities on Falcon Oil and K3 Business 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 Falcon Oil with a short position of K3 Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Oil and K3 Business.
Diversification Opportunities for Falcon Oil and K3 Business
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Falcon and KBT is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Oil Gas and K3 Business Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K3 Business Technology and Falcon Oil 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 Falcon Oil Gas are associated (or correlated) with K3 Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K3 Business Technology has no effect on the direction of Falcon Oil i.e., Falcon Oil and K3 Business go up and down completely randomly.
Pair Corralation between Falcon Oil and K3 Business
Assuming the 90 days trading horizon Falcon Oil Gas is expected to generate 2.56 times more return on investment than K3 Business. However, Falcon Oil is 2.56 times more volatile than K3 Business Technology. It trades about -0.05 of its potential returns per unit of risk. K3 Business Technology is currently generating about -0.14 per unit of risk. If you would invest 1,005 in Falcon Oil Gas on September 2, 2024 and sell it today you would lose (580.00) from holding Falcon Oil Gas or give up 57.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Oil Gas vs. K3 Business Technology
Performance |
| Timeline |
| Falcon Oil Gas |
| K3 Business Technology |
Falcon Oil and K3 Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Oil and K3 Business
The main advantage of trading using opposite Falcon Oil and K3 Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Oil position performs unexpectedly, K3 Business 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 K3 Business will offset losses from the drop in K3 Business' long position.| Falcon Oil vs. Trainline Plc | Falcon Oil vs. European Metals Holdings | Falcon Oil vs. Europa Metals | Falcon Oil vs. Abingdon Health Plc |
| K3 Business vs. Samsung Electronics Co | K3 Business vs. Samsung Electronics Co | K3 Business vs. Hyundai Motor | K3 Business vs. Toyota Motor Corp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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