Correlation Between KINGBOARD CHEMICAL and Wilmar International
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL and Wilmar International 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 Wilmar International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and Wilmar International Limited, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and Wilmar International 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 Wilmar International. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and Wilmar International.
Diversification Opportunities for KINGBOARD CHEMICAL and Wilmar International
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KINGBOARD and Wilmar is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and Wilmar International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmar International 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 Wilmar International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmar International has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and Wilmar International go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and Wilmar International
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 2.16 times more return on investment than Wilmar International. However, KINGBOARD CHEMICAL is 2.16 times more volatile than Wilmar International Limited. It trades about 0.05 of its potential returns per unit of risk. Wilmar International Limited is currently generating about 0.07 per unit of risk. If you would invest 224.00 in KINGBOARD CHEMICAL on September 4, 2024 and sell it today you would earn a total of 4.00 from holding KINGBOARD CHEMICAL or generate 1.79% 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. Wilmar International Limited
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| Wilmar International |
KINGBOARD CHEMICAL and Wilmar International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and Wilmar International
The main advantage of trading using opposite KINGBOARD CHEMICAL and Wilmar International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL position performs unexpectedly, Wilmar International 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 Wilmar International will offset losses from the drop in Wilmar International's long position.| KINGBOARD CHEMICAL vs. TOTAL GABON | KINGBOARD CHEMICAL vs. Walgreens Boots Alliance | KINGBOARD CHEMICAL vs. Peak Resources Limited |
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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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