Correlation Between KINGBOARD CHEMICAL and THORNEY TECHS
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL and THORNEY TECHS 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 THORNEY TECHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and THORNEY TECHS LTD, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and THORNEY TECHS 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 THORNEY TECHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and THORNEY TECHS.
Diversification Opportunities for KINGBOARD CHEMICAL and THORNEY TECHS
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KINGBOARD and THORNEY is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and THORNEY TECHS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THORNEY TECHS LTD 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 THORNEY TECHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THORNEY TECHS LTD has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and THORNEY TECHS go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and THORNEY TECHS
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 0.65 times more return on investment than THORNEY TECHS. However, KINGBOARD CHEMICAL is 1.53 times less risky than THORNEY TECHS. It trades about 0.07 of its potential returns per unit of risk. THORNEY TECHS LTD is currently generating about 0.01 per unit of risk. If you would invest 149.00 in KINGBOARD CHEMICAL on October 16, 2024 and sell it today you would earn a total of 93.00 from holding KINGBOARD CHEMICAL or generate 62.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. THORNEY TECHS LTD
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| THORNEY TECHS LTD |
KINGBOARD CHEMICAL and THORNEY TECHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and THORNEY TECHS
The main advantage of trading using opposite KINGBOARD CHEMICAL and THORNEY TECHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL position performs unexpectedly, THORNEY TECHS 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 THORNEY TECHS will offset losses from the drop in THORNEY TECHS's long position.| KINGBOARD CHEMICAL vs. IMPERIAL TOBACCO | KINGBOARD CHEMICAL vs. CAIRN HOMES EO | KINGBOARD CHEMICAL vs. CarsalesCom | KINGBOARD CHEMICAL vs. OFFICE DEPOT |
| THORNEY TECHS vs. MINCO SILVER | THORNEY TECHS vs. Monument Mining Limited | THORNEY TECHS vs. Aya Gold Silver | THORNEY TECHS vs. Perseus Mining Limited |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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