Correlation Between K W and Wyncoast Industrial
Can any of the company-specific risk be diversified away by investing in both K W and Wyncoast 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 Wyncoast 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 Wyncoast Industrial Park, you can compare the effects of market volatilities on K W and Wyncoast 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 Wyncoast Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of K W and Wyncoast Industrial.
Diversification Opportunities for K W and Wyncoast Industrial
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KWM and Wyncoast is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding K W Metal and Wyncoast Industrial Park in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wyncoast Industrial Park 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 Wyncoast Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wyncoast Industrial Park has no effect on the direction of K W i.e., K W and Wyncoast Industrial go up and down completely randomly.
Pair Corralation between K W and Wyncoast Industrial
Assuming the 90 days trading horizon K W Metal is expected to generate 0.66 times more return on investment than Wyncoast Industrial. However, K W Metal is 1.52 times less risky than Wyncoast Industrial. It trades about 0.14 of its potential returns per unit of risk. Wyncoast Industrial Park is currently generating about -0.19 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 6.00 from holding K W Metal or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
K W Metal vs. Wyncoast Industrial Park
Performance |
| Timeline |
| K W Metal |
| Wyncoast Industrial Park |
K W and Wyncoast Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K W and Wyncoast Industrial
The main advantage of trading using opposite K W and Wyncoast Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K W position performs unexpectedly, Wyncoast 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 Wyncoast Industrial will offset losses from the drop in Wyncoast 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 |
| Wyncoast Industrial vs. Wave Entertainment Public | Wyncoast Industrial vs. Vibhavadi Medical Center | Wyncoast Industrial vs. VGI Public | Wyncoast Industrial vs. WHA Public |
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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