Correlation Between KINGBOARD CHEMICAL and NATIONAL HEALTHCARE
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL and NATIONAL HEALTHCARE 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 NATIONAL HEALTHCARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and NATIONAL HEALTHCARE, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and NATIONAL HEALTHCARE 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 NATIONAL HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and NATIONAL HEALTHCARE.
Diversification Opportunities for KINGBOARD CHEMICAL and NATIONAL HEALTHCARE
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KINGBOARD and NATIONAL is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and NATIONAL HEALTHCARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL HEALTHCARE 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 NATIONAL HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL HEALTHCARE has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and NATIONAL HEALTHCARE go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and NATIONAL HEALTHCARE
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 3.42 times more return on investment than NATIONAL HEALTHCARE. However, KINGBOARD CHEMICAL is 3.42 times more volatile than NATIONAL HEALTHCARE. It trades about 0.16 of its potential returns per unit of risk. NATIONAL HEALTHCARE is currently generating about -0.62 per unit of risk. If you would invest 196.00 in KINGBOARD CHEMICAL on October 11, 2024 and sell it today you would earn a total of 28.00 from holding KINGBOARD CHEMICAL or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. NATIONAL HEALTHCARE
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| NATIONAL HEALTHCARE |
KINGBOARD CHEMICAL and NATIONAL HEALTHCARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and NATIONAL HEALTHCARE
The main advantage of trading using opposite KINGBOARD CHEMICAL and NATIONAL HEALTHCARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL position performs unexpectedly, NATIONAL HEALTHCARE 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 NATIONAL HEALTHCARE will offset losses from the drop in NATIONAL HEALTHCARE's long position.| KINGBOARD CHEMICAL vs. STMICROELECTRONICS | KINGBOARD CHEMICAL vs. Corporate Office Properties | KINGBOARD CHEMICAL vs. Samsung Electronics Co | KINGBOARD CHEMICAL vs. Benchmark Electronics |
| NATIONAL HEALTHCARE vs. Quaker Chemical | NATIONAL HEALTHCARE vs. KINGBOARD CHEMICAL | NATIONAL HEALTHCARE vs. INDO RAMA SYNTHETIC | NATIONAL HEALTHCARE vs. SAN MIGUEL BREWERY |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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