Correlation Between KCI SA and Dom Development
Can any of the company-specific risk be diversified away by investing in both KCI SA and Dom Development 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 KCI SA and Dom Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KCI SA and Dom Development SA, you can compare the effects of market volatilities on KCI SA and Dom Development 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 KCI SA with a short position of Dom Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of KCI SA and Dom Development.
Diversification Opportunities for KCI SA and Dom Development
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KCI and Dom is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding KCI SA and Dom Development SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dom Development SA and KCI SA 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 KCI SA are associated (or correlated) with Dom Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dom Development SA has no effect on the direction of KCI SA i.e., KCI SA and Dom Development go up and down completely randomly.
Pair Corralation between KCI SA and Dom Development
Assuming the 90 days trading horizon KCI SA is expected to under-perform the Dom Development. But the stock apears to be less risky and, when comparing its historical volatility, KCI SA is 1.15 times less risky than Dom Development. The stock trades about -0.02 of its potential returns per unit of risk. The Dom Development SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 18,033 in Dom Development SA on September 1, 2024 and sell it today you would earn a total of 1,667 from holding Dom Development SA or generate 9.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
KCI SA vs. Dom Development SA
Performance |
| Timeline |
| KCI SA |
| Dom Development SA |
KCI SA and Dom Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KCI SA and Dom Development
The main advantage of trading using opposite KCI SA and Dom Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KCI SA position performs unexpectedly, Dom Development 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 Dom Development will offset losses from the drop in Dom Development's long position.| KCI SA vs. Asseco Business Solutions | KCI SA vs. Detalion Games SA | KCI SA vs. Asseco South Eastern | KCI SA vs. CFI Holding SA |
| Dom Development vs. ING Bank lski | Dom Development vs. Carlson Investments SA | Dom Development vs. Investment Friends Capital | Dom Development vs. MCI Management SA |
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 Stocks Directory module to find actively traded stocks across global markets.
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