Correlation Between CHAMPION IRON and KONTIGO CARE
Can any of the company-specific risk be diversified away by investing in both CHAMPION IRON and KONTIGO CARE 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 CHAMPION IRON and KONTIGO CARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHAMPION IRON and KONTIGO CARE AB, you can compare the effects of market volatilities on CHAMPION IRON and KONTIGO CARE 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 CHAMPION IRON with a short position of KONTIGO CARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHAMPION IRON and KONTIGO CARE.
Diversification Opportunities for CHAMPION IRON and KONTIGO CARE
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between CHAMPION and KONTIGO is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CHAMPION IRON and KONTIGO CARE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KONTIGO CARE AB and CHAMPION IRON 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 CHAMPION IRON are associated (or correlated) with KONTIGO CARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KONTIGO CARE AB has no effect on the direction of CHAMPION IRON i.e., CHAMPION IRON and KONTIGO CARE go up and down completely randomly.
Pair Corralation between CHAMPION IRON and KONTIGO CARE
Assuming the 90 days trading horizon CHAMPION IRON is expected to under-perform the KONTIGO CARE. But the stock apears to be less risky and, when comparing its historical volatility, CHAMPION IRON is 3.7 times less risky than KONTIGO CARE. The stock trades about -0.05 of its potential returns per unit of risk. The KONTIGO CARE AB is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 21.00 in KONTIGO CARE AB on November 2, 2024 and sell it today you would lose (4.00) from holding KONTIGO CARE AB or give up 19.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
CHAMPION IRON vs. KONTIGO CARE AB
Performance |
| Timeline |
| CHAMPION IRON |
| KONTIGO CARE AB |
CHAMPION IRON and KONTIGO CARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHAMPION IRON and KONTIGO CARE
The main advantage of trading using opposite CHAMPION IRON and KONTIGO CARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHAMPION IRON position performs unexpectedly, KONTIGO CARE 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 KONTIGO CARE will offset losses from the drop in KONTIGO CARE's long position.| CHAMPION IRON vs. Arrow Electronics | CHAMPION IRON vs. Methode Electronics | CHAMPION IRON vs. KIMBALL ELECTRONICS | CHAMPION IRON vs. Retail Estates NV |
| KONTIGO CARE vs. Apollo Investment Corp | KONTIGO CARE vs. PennyMac Mortgage Investment | KONTIGO CARE vs. Spirent Communications plc | KONTIGO CARE vs. Singapore Telecommunications Limited |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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