Correlation Between K3 Business and Whitbread PLC
Can any of the company-specific risk be diversified away by investing in both K3 Business and Whitbread PLC 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 K3 Business and Whitbread PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K3 Business Technology and Whitbread PLC, you can compare the effects of market volatilities on K3 Business and Whitbread PLC 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 K3 Business with a short position of Whitbread PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of K3 Business and Whitbread PLC.
Diversification Opportunities for K3 Business and Whitbread PLC
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KBT and Whitbread is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding K3 Business Technology and Whitbread PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitbread PLC and K3 Business 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 K3 Business Technology are associated (or correlated) with Whitbread PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitbread PLC has no effect on the direction of K3 Business i.e., K3 Business and Whitbread PLC go up and down completely randomly.
Pair Corralation between K3 Business and Whitbread PLC
Assuming the 90 days trading horizon K3 Business Technology is expected to under-perform the Whitbread PLC. In addition to that, K3 Business is 1.01 times more volatile than Whitbread PLC. It trades about -0.1 of its total potential returns per unit of risk. Whitbread PLC is currently generating about 0.02 per unit of volatility. If you would invest 252,141 in Whitbread PLC on September 3, 2024 and sell it today you would earn a total of 29,259 from holding Whitbread PLC or generate 11.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
K3 Business Technology vs. Whitbread PLC
Performance |
| Timeline |
| K3 Business Technology |
| Whitbread PLC |
K3 Business and Whitbread PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K3 Business and Whitbread PLC
The main advantage of trading using opposite K3 Business and Whitbread PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K3 Business position performs unexpectedly, Whitbread PLC 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 Whitbread PLC will offset losses from the drop in Whitbread PLC's long position.| K3 Business vs. Samsung Electronics Co | K3 Business vs. Samsung Electronics Co | K3 Business vs. Hyundai Motor | K3 Business vs. Toyota Motor Corp |
| Whitbread PLC vs. Albion Technology General | Whitbread PLC vs. K3 Business Technology | Whitbread PLC vs. Ashtead Technology Holdings | Whitbread PLC vs. International Consolidated Airlines |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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