Correlation Between Kap Industrial and Life Healthcare
Can any of the company-specific risk be diversified away by investing in both Kap Industrial and Life Healthcare 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 Life Healthcare 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 Life Healthcare, you can compare the effects of market volatilities on Kap Industrial and Life Healthcare 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 Life Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kap Industrial and Life Healthcare.
Diversification Opportunities for Kap Industrial and Life Healthcare
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kap and Life is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and Life Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Healthcare 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 Life Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Healthcare has no effect on the direction of Kap Industrial i.e., Kap Industrial and Life Healthcare go up and down completely randomly.
Pair Corralation between Kap Industrial and Life Healthcare
Assuming the 90 days trading horizon Kap Industrial Holdings is expected to under-perform the Life Healthcare. In addition to that, Kap Industrial is 1.08 times more volatile than Life Healthcare. It trades about -0.02 of its total potential returns per unit of risk. Life Healthcare is currently generating about 0.01 per unit of volatility. If you would invest 180,368 in Life Healthcare on August 28, 2024 and sell it today you would lose (9,568) from holding Life Healthcare or give up 5.3% 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. Life Healthcare
Performance |
| Timeline |
| Kap Industrial Holdings |
| Life Healthcare |
Kap Industrial and Life Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kap Industrial and Life Healthcare
The main advantage of trading using opposite Kap Industrial and Life Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kap Industrial position performs unexpectedly, Life Healthcare 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 Life Healthcare will offset losses from the drop in Life Healthcare's long position.| Kap Industrial vs. ABSA Bank Limited | Kap Industrial vs. Astral Foods | Kap Industrial vs. Hosken Consolidated Investments | Kap Industrial vs. Trematon Capital Investments |
| Life Healthcare vs. Kap Industrial Holdings | Life Healthcare vs. City Lodge Hotels | Life Healthcare vs. Harmony Gold Mining | Life Healthcare vs. CA Sales Holdings |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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