Correlation Between Klöckner and Pacific Ridge
Can any of the company-specific risk be diversified away by investing in both Klöckner and Pacific Ridge 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 Klöckner and Pacific Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Klckner Co SE and Pacific Ridge Exploration, you can compare the effects of market volatilities on Klöckner and Pacific Ridge 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 Klöckner with a short position of Pacific Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Klöckner and Pacific Ridge.
Diversification Opportunities for Klöckner and Pacific Ridge
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Klöckner and Pacific is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Klckner Co SE and Pacific Ridge Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Ridge Exploration and Klöckner 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 Klckner Co SE are associated (or correlated) with Pacific Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Ridge Exploration has no effect on the direction of Klöckner i.e., Klöckner and Pacific Ridge go up and down completely randomly.
Pair Corralation between Klöckner and Pacific Ridge
Assuming the 90 days horizon Klöckner is expected to generate 16.32 times less return on investment than Pacific Ridge. But when comparing it to its historical volatility, Klckner Co SE is 31.6 times less risky than Pacific Ridge. It trades about 0.21 of its potential returns per unit of risk. Pacific Ridge Exploration is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Pacific Ridge Exploration on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Pacific Ridge Exploration or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Klckner Co SE vs. Pacific Ridge Exploration
Performance |
| Timeline |
| Klckner Co SE |
| Pacific Ridge Exploration |
Klöckner and Pacific Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Klöckner and Pacific Ridge
The main advantage of trading using opposite Klöckner and Pacific Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Klöckner position performs unexpectedly, Pacific Ridge 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 Pacific Ridge will offset losses from the drop in Pacific Ridge's long position.| Klöckner vs. Companhia Siderurgica Nacional | Klöckner vs. Olympic Steel | Klöckner vs. Universal Stainless Alloy | Klöckner vs. POSCO Holdings |
| Pacific Ridge vs. Alien Metals | Pacific Ridge vs. Cartier Iron Corp | Pacific Ridge vs. Arctic Star Exploration | Pacific Ridge vs. Denarius Silver Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |