Correlation Between Kap Industrial and Trencor
Can any of the company-specific risk be diversified away by investing in both Kap Industrial and Trencor 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 Trencor 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 Trencor, you can compare the effects of market volatilities on Kap Industrial and Trencor 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 Trencor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kap Industrial and Trencor.
Diversification Opportunities for Kap Industrial and Trencor
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kap and Trencor is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and Trencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trencor 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 Trencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trencor has no effect on the direction of Kap Industrial i.e., Kap Industrial and Trencor go up and down completely randomly.
Pair Corralation between Kap Industrial and Trencor
Assuming the 90 days trading horizon Kap Industrial Holdings is expected to generate 1.31 times more return on investment than Trencor. However, Kap Industrial is 1.31 times more volatile than Trencor. It trades about 0.13 of its potential returns per unit of risk. Trencor is currently generating about 0.02 per unit of risk. If you would invest 24,000 in Kap Industrial Holdings on September 3, 2024 and sell it today you would earn a total of 10,400 from holding Kap Industrial Holdings or generate 43.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kap Industrial Holdings vs. Trencor
Performance |
| Timeline |
| Kap Industrial Holdings |
| Trencor |
Kap Industrial and Trencor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kap Industrial and Trencor
The main advantage of trading using opposite Kap Industrial and Trencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kap Industrial position performs unexpectedly, Trencor 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 Trencor will offset losses from the drop in Trencor's long position.| Kap Industrial vs. Bidvest Group | Kap Industrial vs. Hosken Consolidated Investments | Kap Industrial vs. Deneb Investments | Kap Industrial vs. Brikor |
| Trencor vs. Ascendis Health | Trencor vs. Trematon Capital Investments | Trencor vs. RCL Foods | Trencor vs. Life Healthcare |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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