Correlation Between KSB Pumps and Unity Foods
Can any of the company-specific risk be diversified away by investing in both KSB Pumps and Unity Foods 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 KSB Pumps and Unity Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KSB Pumps and Unity Foods, you can compare the effects of market volatilities on KSB Pumps and Unity Foods 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 KSB Pumps with a short position of Unity Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of KSB Pumps and Unity Foods.
Diversification Opportunities for KSB Pumps and Unity Foods
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KSB and Unity is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding KSB Pumps and Unity Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Foods and KSB Pumps 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 KSB Pumps are associated (or correlated) with Unity Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Foods has no effect on the direction of KSB Pumps i.e., KSB Pumps and Unity Foods go up and down completely randomly.
Pair Corralation between KSB Pumps and Unity Foods
Assuming the 90 days trading horizon KSB Pumps is expected to generate 1.78 times less return on investment than Unity Foods. But when comparing it to its historical volatility, KSB Pumps is 1.0 times less risky than Unity Foods. It trades about 0.08 of its potential returns per unit of risk. Unity Foods is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,751 in Unity Foods on October 26, 2024 and sell it today you would earn a total of 484.00 from holding Unity Foods or generate 17.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KSB Pumps vs. Unity Foods
Performance |
| Timeline |
| KSB Pumps |
| Unity Foods |
KSB Pumps and Unity Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KSB Pumps and Unity Foods
The main advantage of trading using opposite KSB Pumps and Unity Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KSB Pumps position performs unexpectedly, Unity Foods 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 Unity Foods will offset losses from the drop in Unity Foods' long position.| KSB Pumps vs. ORIX Leasing Pakistan | KSB Pumps vs. Dost Steels | KSB Pumps vs. 786 Investment Limited | KSB Pumps vs. Grays Leasing |
| Unity Foods vs. Murree Brewery | Unity Foods vs. Aisha Steel Mills | Unity Foods vs. Avanceon | Unity Foods vs. Amreli Steels |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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