Correlation Between KINGBOARD CHEMICAL and GEELY AUTOMOBILE
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and GEELY AUTOMOBILE, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and GEELY AUTOMOBILE.
Diversification Opportunities for KINGBOARD CHEMICAL and GEELY AUTOMOBILE
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KINGBOARD and GEELY is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEELY AUTOMOBILE has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and GEELY AUTOMOBILE go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and GEELY AUTOMOBILE
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to under-perform the GEELY AUTOMOBILE. But the stock apears to be less risky and, when comparing its historical volatility, KINGBOARD CHEMICAL is 1.4 times less risky than GEELY AUTOMOBILE. The stock trades about -0.03 of its potential returns per unit of risk. The GEELY AUTOMOBILE is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 170.00 in GEELY AUTOMOBILE on August 31, 2024 and sell it today you would lose (3.00) from holding GEELY AUTOMOBILE or give up 1.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. GEELY AUTOMOBILE
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| GEELY AUTOMOBILE |
KINGBOARD CHEMICAL and GEELY AUTOMOBILE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and GEELY AUTOMOBILE
The main advantage of trading using opposite KINGBOARD CHEMICAL and GEELY AUTOMOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL position performs unexpectedly, GEELY AUTOMOBILE 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 GEELY AUTOMOBILE will offset losses from the drop in GEELY AUTOMOBILE's long position.| KINGBOARD CHEMICAL vs. SIVERS SEMICONDUCTORS AB | KINGBOARD CHEMICAL vs. Darden Restaurants | KINGBOARD CHEMICAL vs. Reliance Steel Aluminum | KINGBOARD CHEMICAL vs. Q2M Managementberatung AG |
| GEELY AUTOMOBILE vs. SIVERS SEMICONDUCTORS AB | GEELY AUTOMOBILE vs. Darden Restaurants | GEELY AUTOMOBILE vs. Reliance Steel Aluminum | GEELY AUTOMOBILE vs. Q2M Managementberatung AG |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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