Correlation Between KINGBOARD CHEMICAL and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL and Vulcan Materials 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 Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and Vulcan Materials, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and Vulcan Materials 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 Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and Vulcan Materials.
Diversification Opportunities for KINGBOARD CHEMICAL and Vulcan Materials
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KINGBOARD and Vulcan is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials 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 Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and Vulcan Materials go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and Vulcan Materials
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 1.99 times more return on investment than Vulcan Materials. However, KINGBOARD CHEMICAL is 1.99 times more volatile than Vulcan Materials. It trades about 0.08 of its potential returns per unit of risk. Vulcan Materials is currently generating about 0.07 per unit of risk. If you would invest 144.00 in KINGBOARD CHEMICAL on November 9, 2024 and sell it today you would earn a total of 106.00 from holding KINGBOARD CHEMICAL or generate 73.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. Vulcan Materials
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| Vulcan Materials |
KINGBOARD CHEMICAL and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and Vulcan Materials
The main advantage of trading using opposite KINGBOARD CHEMICAL and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL position performs unexpectedly, Vulcan Materials 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 Vulcan Materials will offset losses from the drop in Vulcan Materials' long position.| KINGBOARD CHEMICAL vs. SILICON LABORATOR | KINGBOARD CHEMICAL vs. PKSHA TECHNOLOGY INC | KINGBOARD CHEMICAL vs. Casio Computer CoLtd | KINGBOARD CHEMICAL vs. X FAB Silicon Foundries |
| Vulcan Materials vs. MOUNT GIBSON IRON | Vulcan Materials vs. PT Steel Pipe | Vulcan Materials vs. BG Foods | Vulcan Materials vs. Tyson Foods |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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