Correlation Between KINGBOARD CHEMICAL and CVW CLEANTECH
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL and CVW CLEANTECH 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 CVW CLEANTECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and CVW CLEANTECH INC, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and CVW CLEANTECH 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 CVW CLEANTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and CVW CLEANTECH.
Diversification Opportunities for KINGBOARD CHEMICAL and CVW CLEANTECH
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KINGBOARD and CVW is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and CVW CLEANTECH INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CLEANTECH INC 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 CVW CLEANTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CLEANTECH INC has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and CVW CLEANTECH go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and CVW CLEANTECH
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 0.78 times more return on investment than CVW CLEANTECH. However, KINGBOARD CHEMICAL is 1.29 times less risky than CVW CLEANTECH. It trades about 0.05 of its potential returns per unit of risk. CVW CLEANTECH INC is currently generating about 0.01 per unit of risk. If you would invest 137.00 in KINGBOARD CHEMICAL on October 14, 2024 and sell it today you would earn a total of 99.00 from holding KINGBOARD CHEMICAL or generate 72.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. CVW CLEANTECH INC
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| CVW CLEANTECH INC |
KINGBOARD CHEMICAL and CVW CLEANTECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and CVW CLEANTECH
The main advantage of trading using opposite KINGBOARD CHEMICAL and CVW CLEANTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL position performs unexpectedly, CVW CLEANTECH 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 CVW CLEANTECH will offset losses from the drop in CVW CLEANTECH's long position.| KINGBOARD CHEMICAL vs. GALENA MINING LTD | KINGBOARD CHEMICAL vs. ANGLO ASIAN MINING | KINGBOARD CHEMICAL vs. RELIANCE STEEL AL | KINGBOARD CHEMICAL vs. MINCO SILVER |
| CVW CLEANTECH vs. Virtu Financial | CVW CLEANTECH vs. Direct Line Insurance | CVW CLEANTECH vs. Synovus Financial Corp | CVW CLEANTECH vs. United Insurance Holdings |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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