Correlation Between Kool2play and MW Trade
Can any of the company-specific risk be diversified away by investing in both Kool2play and MW Trade 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 Kool2play and MW Trade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kool2play SA and MW Trade SA, you can compare the effects of market volatilities on Kool2play and MW Trade 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 Kool2play with a short position of MW Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kool2play and MW Trade.
Diversification Opportunities for Kool2play and MW Trade
Very weak diversification
The 3 months correlation between Kool2play and MWT is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Kool2play SA and MW Trade SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MW Trade SA and Kool2play 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 Kool2play SA are associated (or correlated) with MW Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MW Trade SA has no effect on the direction of Kool2play i.e., Kool2play and MW Trade go up and down completely randomly.
Pair Corralation between Kool2play and MW Trade
Assuming the 90 days trading horizon Kool2play SA is expected to generate 2.56 times more return on investment than MW Trade. However, Kool2play is 2.56 times more volatile than MW Trade SA. It trades about -0.06 of its potential returns per unit of risk. MW Trade SA is currently generating about -0.45 per unit of risk. If you would invest 100.00 in Kool2play SA on August 28, 2024 and sell it today you would lose (5.00) from holding Kool2play SA or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 75.0% |
| Values | Daily Returns |
Kool2play SA vs. MW Trade SA
Performance |
| Timeline |
| Kool2play SA |
| MW Trade SA |
Kool2play and MW Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kool2play and MW Trade
The main advantage of trading using opposite Kool2play and MW Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kool2play position performs unexpectedly, MW Trade 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 MW Trade will offset losses from the drop in MW Trade's long position.| Kool2play vs. Clean Carbon Energy | Kool2play vs. ADX | Kool2play vs. Agroliga Group PLC | Kool2play vs. Vee SA |
| MW Trade vs. Asseco Business Solutions | MW Trade vs. Detalion Games SA | MW Trade vs. Asseco South Eastern | MW Trade vs. CFI Holding SA |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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