Correlation Between K2 Asset and Iodm
Can any of the company-specific risk be diversified away by investing in both K2 Asset and Iodm 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 Iodm 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 Iodm, you can compare the effects of market volatilities on K2 Asset and Iodm 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 Iodm. Check out your portfolio center. Please also check ongoing floating volatility patterns of K2 Asset and Iodm.
Diversification Opportunities for K2 Asset and Iodm
Very good diversification
The 3 months correlation between KAM and Iodm is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding K2 Asset Management and Iodm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iodm 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 Iodm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iodm has no effect on the direction of K2 Asset i.e., K2 Asset and Iodm go up and down completely randomly.
Pair Corralation between K2 Asset and Iodm
Assuming the 90 days trading horizon K2 Asset Management is expected to generate 1.31 times more return on investment than Iodm. However, K2 Asset is 1.31 times more volatile than Iodm. It trades about 0.05 of its potential returns per unit of risk. Iodm is currently generating about -0.03 per unit of risk. If you would invest 3.45 in K2 Asset Management on September 3, 2024 and sell it today you would earn a total of 3.55 from holding K2 Asset Management or generate 102.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
K2 Asset Management vs. Iodm
Performance |
| Timeline |
| K2 Asset Management |
| Iodm |
K2 Asset and Iodm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K2 Asset and Iodm
The main advantage of trading using opposite K2 Asset and Iodm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K2 Asset position performs unexpectedly, Iodm 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 Iodm will offset losses from the drop in Iodm's long position.The idea behind K2 Asset Management and Iodm 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.| Iodm vs. Cleanaway Waste Management | Iodm vs. K2 Asset Management | Iodm vs. Clime Investment Management | Iodm vs. Computershare |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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