Correlation Between K W and Neo Corporate
Can any of the company-specific risk be diversified away by investing in both K W and Neo Corporate 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 Neo Corporate 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 Neo Corporate Pcl, you can compare the effects of market volatilities on K W and Neo Corporate 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 Neo Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of K W and Neo Corporate.
Diversification Opportunities for K W and Neo Corporate
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KWM and Neo is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding K W Metal and Neo Corporate Pcl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Corporate Pcl 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 Neo Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Corporate Pcl has no effect on the direction of K W i.e., K W and Neo Corporate go up and down completely randomly.
Pair Corralation between K W and Neo Corporate
Assuming the 90 days trading horizon K W Metal is expected to generate 0.68 times more return on investment than Neo Corporate. However, K W Metal is 1.47 times less risky than Neo Corporate. It trades about 0.1 of its potential returns per unit of risk. Neo Corporate Pcl is currently generating about -0.23 per unit of risk. If you would invest 124.00 in K W Metal on September 13, 2024 and sell it today you would earn a total of 4.00 from holding K W Metal or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
K W Metal vs. Neo Corporate Pcl
Performance |
| Timeline |
| K W Metal |
| Neo Corporate Pcl |
K W and Neo Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K W and Neo Corporate
The main advantage of trading using opposite K W and Neo Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K W position performs unexpectedly, Neo Corporate 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 Neo Corporate will offset losses from the drop in Neo Corporate'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 |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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