Correlation Between Kinatico and CSL
Can any of the company-specific risk be diversified away by investing in both Kinatico and CSL 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 Kinatico and CSL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinatico and CSL, you can compare the effects of market volatilities on Kinatico and CSL 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 Kinatico with a short position of CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinatico and CSL.
Diversification Opportunities for Kinatico and CSL
Very good diversification
The 3 months correlation between Kinatico and CSL is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Kinatico and CSL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL and Kinatico 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 Kinatico are associated (or correlated) with CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL has no effect on the direction of Kinatico i.e., Kinatico and CSL go up and down completely randomly.
Pair Corralation between Kinatico and CSL
Assuming the 90 days trading horizon Kinatico is expected to generate 5.29 times more return on investment than CSL. However, Kinatico is 5.29 times more volatile than CSL. It trades about 0.09 of its potential returns per unit of risk. CSL is currently generating about -0.26 per unit of risk. If you would invest 12.00 in Kinatico on August 25, 2024 and sell it today you would earn a total of 1.00 from holding Kinatico or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinatico vs. CSL
Performance |
| Timeline |
| Kinatico |
| CSL |
Kinatico and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinatico and CSL
The main advantage of trading using opposite Kinatico and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinatico position performs unexpectedly, CSL 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 CSL will offset losses from the drop in CSL's long position.The idea behind Kinatico and CSL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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