Correlation Between K2 Asset and CSL
Can any of the company-specific risk be diversified away by investing in both K2 Asset and CSL 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 K2 Asset and CSL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K2 Asset Management and CSL, you can compare the effects of market volatilities on K2 Asset and CSL 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 K2 Asset with a short position of CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of K2 Asset and CSL.
Diversification Opportunities for K2 Asset and CSL
Excellent diversification
The 3 months correlation between KAM and CSL is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding K2 Asset Management and CSL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL and K2 Asset 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 K2 Asset Management are associated (or correlated) with CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL has no effect on the direction of K2 Asset i.e., K2 Asset and CSL go up and down completely randomly.
Pair Corralation between K2 Asset and CSL
Assuming the 90 days trading horizon K2 Asset Management is expected to generate 3.54 times more return on investment than CSL. However, K2 Asset is 3.54 times more volatile than CSL. It trades about 0.32 of its potential returns per unit of risk. CSL is currently generating about -0.1 per unit of risk. If you would invest 6.00 in K2 Asset Management on September 15, 2024 and sell it today you would earn a total of 1.60 from holding K2 Asset Management or generate 26.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
K2 Asset Management vs. CSL
Performance |
| Timeline |
| K2 Asset Management |
| CSL |
K2 Asset and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K2 Asset and CSL
The main advantage of trading using opposite K2 Asset and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K2 Asset position performs unexpectedly, CSL 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 CSL will offset losses from the drop in CSL's long position.| K2 Asset vs. Finexia Financial Group | K2 Asset vs. Bell Financial Group | K2 Asset vs. Perpetual Credit Income | K2 Asset vs. EMvision Medical Devices |
| CSL vs. Dicker Data | CSL vs. Hudson Investment Group | CSL vs. Carlton Investments | CSL vs. K2 Asset Management |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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