Correlation Between KINGBOARD CHEMICAL and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL and MGIC INVESTMENT 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 MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and MGIC INVESTMENT, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and MGIC INVESTMENT 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 MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and MGIC INVESTMENT.
Diversification Opportunities for KINGBOARD CHEMICAL and MGIC INVESTMENT
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KINGBOARD and MGIC is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT 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 MGIC INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC INVESTMENT has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and MGIC INVESTMENT
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 4.62 times more return on investment than MGIC INVESTMENT. However, KINGBOARD CHEMICAL is 4.62 times more volatile than MGIC INVESTMENT. It trades about 0.21 of its potential returns per unit of risk. MGIC INVESTMENT is currently generating about -0.12 per unit of risk. If you would invest 198.00 in KINGBOARD CHEMICAL on October 13, 2024 and sell it today you would earn a total of 38.00 from holding KINGBOARD CHEMICAL or generate 19.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. MGIC INVESTMENT
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| MGIC INVESTMENT |
KINGBOARD CHEMICAL and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and MGIC INVESTMENT
The main advantage of trading using opposite KINGBOARD CHEMICAL and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL position performs unexpectedly, MGIC INVESTMENT 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 MGIC INVESTMENT will offset losses from the drop in MGIC INVESTMENT's long position.| KINGBOARD CHEMICAL vs. FIH MOBILE | KINGBOARD CHEMICAL vs. G III Apparel Group | KINGBOARD CHEMICAL vs. T MOBILE US | KINGBOARD CHEMICAL vs. Zoom Video Communications |
| MGIC INVESTMENT vs. MHP Hotel AG | MGIC INVESTMENT vs. InterContinental Hotels Group | MGIC INVESTMENT vs. The Boston Beer | MGIC INVESTMENT vs. DALATA HOTEL |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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