Correlation Between Loads and KSB Pumps
Can any of the company-specific risk be diversified away by investing in both Loads and KSB Pumps 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 Loads and KSB Pumps into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loads and KSB Pumps, you can compare the effects of market volatilities on Loads and KSB Pumps 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 Loads with a short position of KSB Pumps. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loads and KSB Pumps.
Diversification Opportunities for Loads and KSB Pumps
Very poor diversification
The 3 months correlation between Loads and KSB is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Loads and KSB Pumps in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSB Pumps and Loads 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 Loads are associated (or correlated) with KSB Pumps. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KSB Pumps has no effect on the direction of Loads i.e., Loads and KSB Pumps go up and down completely randomly.
Pair Corralation between Loads and KSB Pumps
Assuming the 90 days trading horizon Loads is expected to generate 1.17 times less return on investment than KSB Pumps. In addition to that, Loads is 1.21 times more volatile than KSB Pumps. It trades about 0.11 of its total potential returns per unit of risk. KSB Pumps is currently generating about 0.15 per unit of volatility. If you would invest 14,510 in KSB Pumps on October 21, 2024 and sell it today you would earn a total of 1,021 from holding KSB Pumps or generate 7.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loads vs. KSB Pumps
Performance |
| Timeline |
| Loads |
| KSB Pumps |
Loads and KSB Pumps Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loads and KSB Pumps
The main advantage of trading using opposite Loads and KSB Pumps positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loads position performs unexpectedly, KSB Pumps 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 KSB Pumps will offset losses from the drop in KSB Pumps' long position.The idea behind Loads and KSB Pumps 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.| KSB Pumps vs. Atlas Insurance | KSB Pumps vs. Habib Insurance | KSB Pumps vs. Askari General Insurance | KSB Pumps vs. Reliance Insurance Co |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |