Correlation Between KINGBOARD CHEMICAL and Clean Energy
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL and Clean Energy 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 Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and Clean Energy Fuels, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and Clean Energy 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 Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and Clean Energy.
Diversification Opportunities for KINGBOARD CHEMICAL and Clean Energy
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between KINGBOARD and Clean is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and Clean Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Energy Fuels 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 Clean Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Energy Fuels has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and Clean Energy go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and Clean Energy
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 0.96 times more return on investment than Clean Energy. However, KINGBOARD CHEMICAL is 1.04 times less risky than Clean Energy. It trades about 0.05 of its potential returns per unit of risk. Clean Energy Fuels 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. Clean Energy Fuels
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| Clean Energy Fuels |
KINGBOARD CHEMICAL and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and Clean Energy
The main advantage of trading using opposite KINGBOARD CHEMICAL and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL position performs unexpectedly, Clean Energy 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 Clean Energy will offset losses from the drop in Clean Energy'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 |
| Clean Energy vs. UPDATE SOFTWARE | Clean Energy vs. Goosehead Insurance | Clean Energy vs. Vishay Intertechnology | Clean Energy vs. INSURANCE AUST GRP |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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