Correlation Between Kawasaki Heavy and Dear Cashmere
Can any of the company-specific risk be diversified away by investing in both Kawasaki Heavy and Dear Cashmere 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 Kawasaki Heavy and Dear Cashmere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kawasaki Heavy Industries and Dear Cashmere Holding, you can compare the effects of market volatilities on Kawasaki Heavy and Dear Cashmere 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 Kawasaki Heavy with a short position of Dear Cashmere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawasaki Heavy and Dear Cashmere.
Diversification Opportunities for Kawasaki Heavy and Dear Cashmere
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kawasaki and Dear is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kawasaki Heavy Industries and Dear Cashmere Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dear Cashmere Holding and Kawasaki Heavy 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 Kawasaki Heavy Industries are associated (or correlated) with Dear Cashmere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dear Cashmere Holding has no effect on the direction of Kawasaki Heavy i.e., Kawasaki Heavy and Dear Cashmere go up and down completely randomly.
Pair Corralation between Kawasaki Heavy and Dear Cashmere
Assuming the 90 days horizon Kawasaki Heavy is expected to generate 3.64 times less return on investment than Dear Cashmere. But when comparing it to its historical volatility, Kawasaki Heavy Industries is 3.54 times less risky than Dear Cashmere. It trades about 0.09 of its potential returns per unit of risk. Dear Cashmere Holding is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7.10 in Dear Cashmere Holding on September 3, 2024 and sell it today you would earn a total of 9.90 from holding Dear Cashmere Holding or generate 139.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kawasaki Heavy Industries vs. Dear Cashmere Holding
Performance |
| Timeline |
| Kawasaki Heavy Industries |
| Dear Cashmere Holding |
Kawasaki Heavy and Dear Cashmere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kawasaki Heavy and Dear Cashmere
The main advantage of trading using opposite Kawasaki Heavy and Dear Cashmere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kawasaki Heavy position performs unexpectedly, Dear Cashmere 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 Dear Cashmere will offset losses from the drop in Dear Cashmere's long position.| Kawasaki Heavy vs. Dear Cashmere Holding | Kawasaki Heavy vs. Goff Corp | Kawasaki Heavy vs. Wialan Technologies | Kawasaki Heavy vs. Cgrowth Capital |
| Dear Cashmere vs. Salesforce | Dear Cashmere vs. SAP SE ADR | Dear Cashmere vs. ServiceNow | Dear Cashmere vs. Intuit Inc |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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