Correlation Between KINGBOARD CHEMICAL and CHEMICAL INDUSTRIES
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL and CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and CHEMICAL INDUSTRIES, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and CHEMICAL INDUSTRIES.
Diversification Opportunities for KINGBOARD CHEMICAL and CHEMICAL INDUSTRIES
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KINGBOARD and CHEMICAL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and CHEMICAL INDUSTRIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHEMICAL INDUSTRIES has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and CHEMICAL INDUSTRIES go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and CHEMICAL INDUSTRIES
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 10.93 times more return on investment than CHEMICAL INDUSTRIES. However, KINGBOARD CHEMICAL is 10.93 times more volatile than CHEMICAL INDUSTRIES. It trades about 0.1 of its potential returns per unit of risk. CHEMICAL INDUSTRIES is currently generating about 0.06 per unit of risk. If you would invest 121.00 in KINGBOARD CHEMICAL on November 3, 2024 and sell it today you would earn a total of 125.00 from holding KINGBOARD CHEMICAL or generate 103.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. CHEMICAL INDUSTRIES
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| CHEMICAL INDUSTRIES |
KINGBOARD CHEMICAL and CHEMICAL INDUSTRIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and CHEMICAL INDUSTRIES
The main advantage of trading using opposite KINGBOARD CHEMICAL and CHEMICAL INDUSTRIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL position performs unexpectedly, CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES will offset losses from the drop in CHEMICAL INDUSTRIES's long position.| KINGBOARD CHEMICAL vs. Fast Retailing Co | KINGBOARD CHEMICAL vs. GOODYEAR T RUBBER | KINGBOARD CHEMICAL vs. National Retail Properties | KINGBOARD CHEMICAL vs. CARSALESCOM |
| CHEMICAL INDUSTRIES vs. alstria office REIT AG | CHEMICAL INDUSTRIES vs. JD SPORTS FASH | CHEMICAL INDUSTRIES vs. KENEDIX OFFICE INV | CHEMICAL INDUSTRIES vs. ADDUS HOMECARE |
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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