Correlation Between KINGBOARD CHEMICAL and Tradegate
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL and Tradegate 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 Tradegate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and Tradegate AG Wertpapierhandelsbank, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and Tradegate 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 Tradegate. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and Tradegate.
Diversification Opportunities for KINGBOARD CHEMICAL and Tradegate
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KINGBOARD and Tradegate is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and Tradegate AG Wertpapierhandels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradegate AG Wertpap 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 Tradegate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradegate AG Wertpap has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and Tradegate go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and Tradegate
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 6.89 times more return on investment than Tradegate. However, KINGBOARD CHEMICAL is 6.89 times more volatile than Tradegate AG Wertpapierhandelsbank. It trades about 0.05 of its potential returns per unit of risk. Tradegate AG Wertpapierhandelsbank is currently generating about 0.18 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 Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. Tradegate AG Wertpapierhandels
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| Tradegate AG Wertpap |
KINGBOARD CHEMICAL and Tradegate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and Tradegate
The main advantage of trading using opposite KINGBOARD CHEMICAL and Tradegate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL position performs unexpectedly, Tradegate 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 Tradegate will offset losses from the drop in Tradegate's long position.| KINGBOARD CHEMICAL vs. TOTAL GABON | KINGBOARD CHEMICAL vs. Walgreens Boots Alliance | KINGBOARD CHEMICAL vs. Peak Resources Limited |
| Tradegate vs. RETAIL FOOD GROUP | Tradegate vs. KINGBOARD CHEMICAL | Tradegate vs. CHEMICAL INDUSTRIES | Tradegate vs. CarsalesCom |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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