Correlation Between KINGBOARD CHEMICAL and GFL ENVIRONM
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL and GFL ENVIRONM 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 KINGBOARD CHEMICAL and GFL ENVIRONM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and GFL ENVIRONM, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and GFL ENVIRONM 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 KINGBOARD CHEMICAL with a short position of GFL ENVIRONM. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and GFL ENVIRONM.
Diversification Opportunities for KINGBOARD CHEMICAL and GFL ENVIRONM
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KINGBOARD and GFL is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and GFL ENVIRONM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFL ENVIRONM and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL are associated (or correlated) with GFL ENVIRONM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFL ENVIRONM has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and GFL ENVIRONM go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and GFL ENVIRONM
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 1.19 times less return on investment than GFL ENVIRONM. In addition to that, KINGBOARD CHEMICAL is 2.04 times more volatile than GFL ENVIRONM. It trades about 0.05 of its total potential returns per unit of risk. GFL ENVIRONM is currently generating about 0.11 per unit of volatility. If you would invest 3,537 in GFL ENVIRONM on September 3, 2024 and sell it today you would earn a total of 863.00 from holding GFL ENVIRONM or generate 24.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. GFL ENVIRONM
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| GFL ENVIRONM |
KINGBOARD CHEMICAL and GFL ENVIRONM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and GFL ENVIRONM
The main advantage of trading using opposite KINGBOARD CHEMICAL and GFL ENVIRONM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL position performs unexpectedly, GFL ENVIRONM 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 GFL ENVIRONM will offset losses from the drop in GFL ENVIRONM's long position.| KINGBOARD CHEMICAL vs. TOTAL GABON | KINGBOARD CHEMICAL vs. Walgreens Boots Alliance | KINGBOARD CHEMICAL vs. Peak Resources Limited |
| GFL ENVIRONM vs. TIANDE CHEMICAL | GFL ENVIRONM vs. PennyMac Mortgage Investment | GFL ENVIRONM vs. KINGBOARD CHEMICAL | GFL ENVIRONM vs. SEI 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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