Correlation Between KINGBOARD CHEMICAL and UNITED UTILITIES
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL and UNITED UTILITIES 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 UNITED UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and UNITED UTILITIES GR, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and UNITED UTILITIES 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 UNITED UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and UNITED UTILITIES.
Diversification Opportunities for KINGBOARD CHEMICAL and UNITED UTILITIES
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between KINGBOARD and UNITED is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and UNITED UTILITIES GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED UTILITIES 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 UNITED UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED UTILITIES has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and UNITED UTILITIES go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and UNITED UTILITIES
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 2.49 times more return on investment than UNITED UTILITIES. However, KINGBOARD CHEMICAL is 2.49 times more volatile than UNITED UTILITIES GR. It trades about 0.04 of its potential returns per unit of risk. UNITED UTILITIES GR is currently generating about 0.04 per unit of risk. If you would invest 155.00 in KINGBOARD CHEMICAL on September 3, 2024 and sell it today you would earn a total of 69.00 from holding KINGBOARD CHEMICAL or generate 44.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. UNITED UTILITIES GR
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| UNITED UTILITIES |
KINGBOARD CHEMICAL and UNITED UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and UNITED UTILITIES
The main advantage of trading using opposite KINGBOARD CHEMICAL and UNITED UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL position performs unexpectedly, UNITED UTILITIES 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 UNITED UTILITIES will offset losses from the drop in UNITED UTILITIES's long position.| KINGBOARD CHEMICAL vs. TOTAL GABON | KINGBOARD CHEMICAL vs. Walgreens Boots Alliance | KINGBOARD CHEMICAL vs. Peak Resources Limited |
| UNITED UTILITIES vs. ANTA SPORTS PRODUCT | UNITED UTILITIES vs. Transport International Holdings | UNITED UTILITIES vs. Sqs Software Quality | UNITED UTILITIES vs. PSI Software AG |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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