Correlation Between Leading Edge and Kiplin Metals
Can any of the company-specific risk be diversified away by investing in both Leading Edge and Kiplin Metals 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 Leading Edge and Kiplin Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leading Edge Materials and Kiplin Metals, you can compare the effects of market volatilities on Leading Edge and Kiplin Metals 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 Leading Edge with a short position of Kiplin Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leading Edge and Kiplin Metals.
Diversification Opportunities for Leading Edge and Kiplin Metals
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Leading and Kiplin is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Leading Edge Materials and Kiplin Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiplin Metals and Leading Edge 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 Leading Edge Materials are associated (or correlated) with Kiplin Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiplin Metals has no effect on the direction of Leading Edge i.e., Leading Edge and Kiplin Metals go up and down completely randomly.
Pair Corralation between Leading Edge and Kiplin Metals
Assuming the 90 days horizon Leading Edge Materials is expected to under-perform the Kiplin Metals. But the stock apears to be less risky and, when comparing its historical volatility, Leading Edge Materials is 1.18 times less risky than Kiplin Metals. The stock trades about -0.03 of its potential returns per unit of risk. The Kiplin Metals is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 39.00 in Kiplin Metals on September 3, 2024 and sell it today you would lose (12.00) from holding Kiplin Metals or give up 30.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leading Edge Materials vs. Kiplin Metals
Performance |
| Timeline |
| Leading Edge Materials |
| Kiplin Metals |
Leading Edge and Kiplin Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leading Edge and Kiplin Metals
The main advantage of trading using opposite Leading Edge and Kiplin Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leading Edge position performs unexpectedly, Kiplin Metals 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 Kiplin Metals will offset losses from the drop in Kiplin Metals' long position.| Leading Edge vs. Algoma Steel Group | Leading Edge vs. Champion Iron | Leading Edge vs. International Zeolite Corp | Leading Edge vs. European Residential Real |
| Kiplin Metals vs. Algoma Steel Group | Kiplin Metals vs. Champion Iron | Kiplin Metals vs. International Zeolite Corp | Kiplin Metals vs. European Residential Real |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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