Correlation Between G III and KINGBOARD CHEMICAL
Can any of the company-specific risk be diversified away by investing in both G III and KINGBOARD CHEMICAL 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 G III and KINGBOARD CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G III Apparel Group and KINGBOARD CHEMICAL, you can compare the effects of market volatilities on G III and KINGBOARD CHEMICAL 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 G III with a short position of KINGBOARD CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of G III and KINGBOARD CHEMICAL.
Diversification Opportunities for G III and KINGBOARD CHEMICAL
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GI4 and KINGBOARD is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and KINGBOARD CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGBOARD CHEMICAL and G III 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 G III Apparel Group are associated (or correlated) with KINGBOARD CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINGBOARD CHEMICAL has no effect on the direction of G III i.e., G III and KINGBOARD CHEMICAL go up and down completely randomly.
Pair Corralation between G III and KINGBOARD CHEMICAL
Assuming the 90 days trading horizon G III Apparel Group is expected to generate 1.11 times more return on investment than KINGBOARD CHEMICAL. However, G III is 1.11 times more volatile than KINGBOARD CHEMICAL. It trades about 0.17 of its potential returns per unit of risk. KINGBOARD CHEMICAL is currently generating about 0.05 per unit of risk. If you would invest 2,740 in G III Apparel Group on September 4, 2024 and sell it today you would earn a total of 240.00 from holding G III Apparel Group or generate 8.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G III Apparel Group vs. KINGBOARD CHEMICAL
Performance |
| Timeline |
| G III Apparel |
| KINGBOARD CHEMICAL |
G III and KINGBOARD CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G III and KINGBOARD CHEMICAL
The main advantage of trading using opposite G III and KINGBOARD CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III position performs unexpectedly, KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL will offset losses from the drop in KINGBOARD CHEMICAL's long position.The idea behind G III Apparel Group and KINGBOARD CHEMICAL 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.| KINGBOARD CHEMICAL vs. TOTAL GABON | KINGBOARD CHEMICAL vs. Walgreens Boots Alliance | KINGBOARD CHEMICAL vs. Peak Resources Limited |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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