Correlation Between K W and AIM Industrial
Can any of the company-specific risk be diversified away by investing in both K W and AIM Industrial 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 K W and AIM Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K W Metal and AIM Industrial Growth, you can compare the effects of market volatilities on K W and AIM Industrial 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 K W with a short position of AIM Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of K W and AIM Industrial.
Diversification Opportunities for K W and AIM Industrial
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KWM and AIM is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding K W Metal and AIM Industrial Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM Industrial Growth and K W 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 K W Metal are associated (or correlated) with AIM Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM Industrial Growth has no effect on the direction of K W i.e., K W and AIM Industrial go up and down completely randomly.
Pair Corralation between K W and AIM Industrial
Assuming the 90 days trading horizon K W Metal is expected to generate 2.48 times more return on investment than AIM Industrial. However, K W is 2.48 times more volatile than AIM Industrial Growth. It trades about 0.22 of its potential returns per unit of risk. AIM Industrial Growth is currently generating about 0.22 per unit of risk. If you would invest 121.00 in K W Metal on September 14, 2024 and sell it today you would earn a total of 9.00 from holding K W Metal or generate 7.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
K W Metal vs. AIM Industrial Growth
Performance |
| Timeline |
| K W Metal |
| AIM Industrial Growth |
K W and AIM Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K W and AIM Industrial
The main advantage of trading using opposite K W and AIM Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K W position performs unexpectedly, AIM Industrial 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 AIM Industrial will offset losses from the drop in AIM Industrial's long position.| K W vs. Masterkool International Public | K W vs. Infraset Public | K W vs. KC Metalsheet Public | K W vs. DOD Biotech Public |
| AIM Industrial vs. Amata Summit Growth | AIM Industrial vs. WHA Premium Growth | AIM Industrial vs. Digital Telecommunications Infrastructure | AIM Industrial vs. Quality Houses Property |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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