Correlation Between K2 Asset and Technology One
Can any of the company-specific risk be diversified away by investing in both K2 Asset and Technology One 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 Technology One 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 Technology One, you can compare the effects of market volatilities on K2 Asset and Technology One 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 Technology One. Check out your portfolio center. Please also check ongoing floating volatility patterns of K2 Asset and Technology One.
Diversification Opportunities for K2 Asset and Technology One
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KAM and Technology is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding K2 Asset Management and Technology One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology One 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 Technology One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology One has no effect on the direction of K2 Asset i.e., K2 Asset and Technology One go up and down completely randomly.
Pair Corralation between K2 Asset and Technology One
Assuming the 90 days trading horizon K2 Asset Management is expected to generate 1.35 times more return on investment than Technology One. However, K2 Asset is 1.35 times more volatile than Technology One. It trades about 0.16 of its potential returns per unit of risk. Technology One is currently generating about 0.11 per unit of risk. If you would invest 6.00 in K2 Asset Management on October 16, 2024 and sell it today you would earn a total of 1.10 from holding K2 Asset Management or generate 18.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
K2 Asset Management vs. Technology One
Performance |
| Timeline |
| K2 Asset Management |
| Technology One |
K2 Asset and Technology One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K2 Asset and Technology One
The main advantage of trading using opposite K2 Asset and Technology One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K2 Asset position performs unexpectedly, Technology One 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 Technology One will offset losses from the drop in Technology One's long position.| K2 Asset vs. Clime Investment Management | K2 Asset vs. A1 Investments Resources | K2 Asset vs. Insurance Australia Group | K2 Asset vs. National Australia Bank |
| Technology One vs. Falcon Metals | Technology One vs. MetalsGrove Mining | Technology One vs. Stelar Metals | Technology One 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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