Correlation Between H B and Koppers Holdings
Can any of the company-specific risk be diversified away by investing in both H B and Koppers 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 H B and Koppers Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H B Fuller and Koppers Holdings, you can compare the effects of market volatilities on H B and Koppers 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 H B with a short position of Koppers Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of H B and Koppers Holdings.
Diversification Opportunities for H B and Koppers Holdings
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FUL and Koppers is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding H B Fuller and Koppers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koppers Holdings and H B 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 H B Fuller are associated (or correlated) with Koppers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koppers Holdings has no effect on the direction of H B i.e., H B and Koppers Holdings go up and down completely randomly.
Pair Corralation between H B and Koppers Holdings
Considering the 90-day investment horizon H B is expected to generate 2.11 times less return on investment than Koppers Holdings. But when comparing it to its historical volatility, H B Fuller is 1.44 times less risky than Koppers Holdings. It trades about 0.01 of its potential returns per unit of risk. Koppers Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,146 in Koppers Holdings on November 1, 2024 and sell it today you would lose (84.00) from holding Koppers Holdings or give up 2.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
H B Fuller vs. Koppers Holdings
Performance |
| Timeline |
| H B Fuller |
| Koppers Holdings |
H B and Koppers Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H B and Koppers Holdings
The main advantage of trading using opposite H B and Koppers Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H B position performs unexpectedly, Koppers 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 Koppers Holdings will offset losses from the drop in Koppers Holdings' long position.The idea behind H B Fuller and Koppers Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Koppers Holdings vs. H B Fuller | Koppers Holdings vs. Minerals Technologies | Koppers Holdings vs. Quaker Chemical | Koppers Holdings vs. Oil Dri |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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