Correlation Between Insteel Industries and Kura Sushi
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and Kura Sushi 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 Insteel Industries and Kura Sushi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and Kura Sushi USA, you can compare the effects of market volatilities on Insteel Industries and Kura Sushi 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 Insteel Industries with a short position of Kura Sushi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Kura Sushi.
Diversification Opportunities for Insteel Industries and Kura Sushi
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Insteel and Kura is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Kura Sushi USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kura Sushi USA and Insteel Industries 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 Insteel Industries are associated (or correlated) with Kura Sushi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kura Sushi USA has no effect on the direction of Insteel Industries i.e., Insteel Industries and Kura Sushi go up and down completely randomly.
Pair Corralation between Insteel Industries and Kura Sushi
Given the investment horizon of 90 days Insteel Industries is expected to generate 4.55 times less return on investment than Kura Sushi. But when comparing it to its historical volatility, Insteel Industries is 1.92 times less risky than Kura Sushi. It trades about 0.02 of its potential returns per unit of risk. Kura Sushi USA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,276 in Kura Sushi USA on September 2, 2024 and sell it today you would earn a total of 4,416 from holding Kura Sushi USA or generate 70.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insteel Industries vs. Kura Sushi USA
Performance |
| Timeline |
| Insteel Industries |
| Kura Sushi USA |
Insteel Industries and Kura Sushi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and Kura Sushi
The main advantage of trading using opposite Insteel Industries and Kura Sushi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, Kura Sushi 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 Kura Sushi will offset losses from the drop in Kura Sushi's long position.| Insteel Industries vs. Mayville Engineering Co | Insteel Industries vs. Gulf Island Fabrication | Insteel Industries vs. ESAB Corp | Insteel Industries vs. Northwest Pipe |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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