Correlation Between Kingspan Group and Origin Enterprises
Can any of the company-specific risk be diversified away by investing in both Kingspan Group and Origin Enterprises 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 Kingspan Group and Origin Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kingspan Group plc and Origin Enterprises Plc, you can compare the effects of market volatilities on Kingspan Group and Origin Enterprises 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 Kingspan Group with a short position of Origin Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingspan Group and Origin Enterprises.
Diversification Opportunities for Kingspan Group and Origin Enterprises
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kingspan and Origin is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kingspan Group plc and Origin Enterprises Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Enterprises Plc and Kingspan Group 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 Kingspan Group plc are associated (or correlated) with Origin Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Enterprises Plc has no effect on the direction of Kingspan Group i.e., Kingspan Group and Origin Enterprises go up and down completely randomly.
Pair Corralation between Kingspan Group and Origin Enterprises
Assuming the 90 days trading horizon Kingspan Group plc is expected to generate 1.09 times more return on investment than Origin Enterprises. However, Kingspan Group is 1.09 times more volatile than Origin Enterprises Plc. It trades about -0.16 of its potential returns per unit of risk. Origin Enterprises Plc is currently generating about -0.18 per unit of risk. If you would invest 8,045 in Kingspan Group plc on August 24, 2024 and sell it today you would lose (605.00) from holding Kingspan Group plc or give up 7.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kingspan Group plc vs. Origin Enterprises Plc
Performance |
| Timeline |
| Kingspan Group plc |
| Origin Enterprises Plc |
Kingspan Group and Origin Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingspan Group and Origin Enterprises
The main advantage of trading using opposite Kingspan Group and Origin Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingspan Group position performs unexpectedly, Origin Enterprises 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 Origin Enterprises will offset losses from the drop in Origin Enterprises' long position.| Kingspan Group vs. Kerry Group | Kingspan Group vs. Glanbia PLC | Kingspan Group vs. Bank of Ireland | Kingspan Group vs. Dalata Hotel Group |
| Origin Enterprises vs. Glanbia PLC | Origin Enterprises vs. Kerry Group | Origin Enterprises vs. FBD Holdings PLC | Origin Enterprises vs. Dalata Hotel Group |
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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