Correlation Between KINGBOARD CHEMICAL and Sanoma Oyj
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL and Sanoma Oyj 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 Sanoma Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and Sanoma Oyj, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and Sanoma Oyj 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 Sanoma Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and Sanoma Oyj.
Diversification Opportunities for KINGBOARD CHEMICAL and Sanoma Oyj
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KINGBOARD and Sanoma is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and Sanoma Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanoma Oyj 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 Sanoma Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanoma Oyj has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and Sanoma Oyj go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and Sanoma Oyj
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to under-perform the Sanoma Oyj. In addition to that, KINGBOARD CHEMICAL is 1.1 times more volatile than Sanoma Oyj. It trades about -0.01 of its total potential returns per unit of risk. Sanoma Oyj is currently generating about 0.08 per unit of volatility. If you would invest 678.00 in Sanoma Oyj on August 28, 2024 and sell it today you would earn a total of 21.00 from holding Sanoma Oyj or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. Sanoma Oyj
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| Sanoma Oyj |
KINGBOARD CHEMICAL and Sanoma Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and Sanoma Oyj
The main advantage of trading using opposite KINGBOARD CHEMICAL and Sanoma Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL position performs unexpectedly, Sanoma Oyj 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 Sanoma Oyj will offset losses from the drop in Sanoma Oyj's long position.| KINGBOARD CHEMICAL vs. Apple Inc | KINGBOARD CHEMICAL vs. Apple Inc | KINGBOARD CHEMICAL vs. Apple Inc | KINGBOARD CHEMICAL vs. Microsoft |
| Sanoma Oyj vs. HYATT HOTELS A | Sanoma Oyj vs. National Health Investors | Sanoma Oyj vs. COVIVIO HOTELS INH | Sanoma Oyj vs. Summit Hotel Properties |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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