Correlation Between Kap Industrial and Blue Label
Can any of the company-specific risk be diversified away by investing in both Kap Industrial and Blue Label 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 Kap Industrial and Blue Label into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kap Industrial Holdings and Blue Label Telecoms, you can compare the effects of market volatilities on Kap Industrial and Blue Label 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 Kap Industrial with a short position of Blue Label. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kap Industrial and Blue Label.
Diversification Opportunities for Kap Industrial and Blue Label
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kap and Blue is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and Blue Label Telecoms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Label Telecoms and Kap Industrial 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 Kap Industrial Holdings are associated (or correlated) with Blue Label. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Label Telecoms has no effect on the direction of Kap Industrial i.e., Kap Industrial and Blue Label go up and down completely randomly.
Pair Corralation between Kap Industrial and Blue Label
Assuming the 90 days trading horizon Kap Industrial Holdings is expected to generate 2.32 times more return on investment than Blue Label. However, Kap Industrial is 2.32 times more volatile than Blue Label Telecoms. It trades about -0.04 of its potential returns per unit of risk. Blue Label Telecoms is currently generating about -0.38 per unit of risk. If you would invest 33,800 in Kap Industrial Holdings on August 31, 2024 and sell it today you would lose (800.00) from holding Kap Industrial Holdings or give up 2.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kap Industrial Holdings vs. Blue Label Telecoms
Performance |
| Timeline |
| Kap Industrial Holdings |
| Blue Label Telecoms |
Kap Industrial and Blue Label Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kap Industrial and Blue Label
The main advantage of trading using opposite Kap Industrial and Blue Label positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kap Industrial position performs unexpectedly, Blue Label 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 Blue Label will offset losses from the drop in Blue Label's long position.| Kap Industrial vs. HomeChoice Investments | Kap Industrial vs. Hosken Consolidated Investments | Kap Industrial vs. Astoria Investments | Kap Industrial vs. Trematon Capital Investments |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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