Correlation Between Flexible Solutions and Kronos Worldwide
Can any of the company-specific risk be diversified away by investing in both Flexible Solutions and Kronos Worldwide 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 Flexible Solutions and Kronos Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexible Solutions International and Kronos Worldwide, you can compare the effects of market volatilities on Flexible Solutions and Kronos Worldwide 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 Flexible Solutions with a short position of Kronos Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and Kronos Worldwide.
Diversification Opportunities for Flexible Solutions and Kronos Worldwide
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Flexible and Kronos is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and Kronos Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Worldwide and Flexible Solutions 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 Flexible Solutions International are associated (or correlated) with Kronos Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Worldwide has no effect on the direction of Flexible Solutions i.e., Flexible Solutions and Kronos Worldwide go up and down completely randomly.
Pair Corralation between Flexible Solutions and Kronos Worldwide
Considering the 90-day investment horizon Flexible Solutions International is expected to generate 1.25 times more return on investment than Kronos Worldwide. However, Flexible Solutions is 1.25 times more volatile than Kronos Worldwide. It trades about 0.03 of its potential returns per unit of risk. Kronos Worldwide is currently generating about 0.04 per unit of risk. If you would invest 303.00 in Flexible Solutions International on August 26, 2024 and sell it today you would earn a total of 99.00 from holding Flexible Solutions International or generate 32.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flexible Solutions Internation vs. Kronos Worldwide
Performance |
| Timeline |
| Flexible Solutions |
| Kronos Worldwide |
Flexible Solutions and Kronos Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexible Solutions and Kronos Worldwide
The main advantage of trading using opposite Flexible Solutions and Kronos Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions position performs unexpectedly, Kronos Worldwide 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 Kronos Worldwide will offset losses from the drop in Kronos Worldwide's long position.| Flexible Solutions vs. Minerals Technologies | Flexible Solutions vs. Oil Dri | Flexible Solutions vs. H B Fuller | Flexible Solutions vs. Northern Technologies |
| Kronos Worldwide vs. Oil Dri | Kronos Worldwide vs. Quaker Chemical | Kronos Worldwide vs. Ecovyst | Kronos Worldwide vs. Minerals Technologies |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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