Correlation Between Kap Industrial and Octodec
Can any of the company-specific risk be diversified away by investing in both Kap Industrial and Octodec 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 Octodec 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 Octodec, you can compare the effects of market volatilities on Kap Industrial and Octodec 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 Octodec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kap Industrial and Octodec.
Diversification Opportunities for Kap Industrial and Octodec
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kap and Octodec is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and Octodec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Octodec 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 Octodec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Octodec has no effect on the direction of Kap Industrial i.e., Kap Industrial and Octodec go up and down completely randomly.
Pair Corralation between Kap Industrial and Octodec
Assuming the 90 days trading horizon Kap Industrial Holdings is expected to under-perform the Octodec. In addition to that, Kap Industrial is 1.75 times more volatile than Octodec. It trades about -0.04 of its total potential returns per unit of risk. Octodec is currently generating about -0.02 per unit of volatility. If you would invest 120,700 in Octodec on August 31, 2024 and sell it today you would lose (900.00) from holding Octodec or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kap Industrial Holdings vs. Octodec
Performance |
| Timeline |
| Kap Industrial Holdings |
| Octodec |
Kap Industrial and Octodec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kap Industrial and Octodec
The main advantage of trading using opposite Kap Industrial and Octodec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kap Industrial position performs unexpectedly, Octodec 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 Octodec will offset losses from the drop in Octodec'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 |
| Octodec vs. Bytes Technology | Octodec vs. Kap Industrial Holdings | Octodec vs. Copper 360 | Octodec vs. Deneb 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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