Correlation Between K Bro and Pollard Banknote
Can any of the company-specific risk be diversified away by investing in both K Bro and Pollard Banknote 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 K Bro and Pollard Banknote into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K Bro Linen and Pollard Banknote Limited, you can compare the effects of market volatilities on K Bro and Pollard Banknote 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 K Bro with a short position of Pollard Banknote. Check out your portfolio center. Please also check ongoing floating volatility patterns of K Bro and Pollard Banknote.
Diversification Opportunities for K Bro and Pollard Banknote
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between KBL and Pollard is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding K Bro Linen and Pollard Banknote Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pollard Banknote and K Bro 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 K Bro Linen are associated (or correlated) with Pollard Banknote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pollard Banknote has no effect on the direction of K Bro i.e., K Bro and Pollard Banknote go up and down completely randomly.
Pair Corralation between K Bro and Pollard Banknote
Assuming the 90 days trading horizon K Bro is expected to generate 1.55 times less return on investment than Pollard Banknote. But when comparing it to its historical volatility, K Bro Linen is 1.81 times less risky than Pollard Banknote. It trades about 0.05 of its potential returns per unit of risk. Pollard Banknote Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,776 in Pollard Banknote Limited on August 28, 2024 and sell it today you would earn a total of 789.00 from holding Pollard Banknote Limited or generate 44.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
K Bro Linen vs. Pollard Banknote Limited
Performance |
| Timeline |
| K Bro Linen |
| Pollard Banknote |
K Bro and Pollard Banknote Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K Bro and Pollard Banknote
The main advantage of trading using opposite K Bro and Pollard Banknote positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K Bro position performs unexpectedly, Pollard Banknote 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 Pollard Banknote will offset losses from the drop in Pollard Banknote's long position.| K Bro vs. Richards Packaging Income | K Bro vs. Ag Growth International | K Bro vs. Information Services | K Bro vs. Pollard Banknote Limited |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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