Correlation Between Origin Materials and Kingboard Chemical
Can any of the company-specific risk be diversified away by investing in both Origin Materials and Kingboard Chemical 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 Origin Materials and Kingboard Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Materials and Kingboard Chemical Holdings, you can compare the effects of market volatilities on Origin Materials and Kingboard Chemical 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 Origin Materials with a short position of Kingboard Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Materials and Kingboard Chemical.
Diversification Opportunities for Origin Materials and Kingboard Chemical
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Origin and Kingboard is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials and Kingboard Chemical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingboard Chemical and Origin Materials 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 Origin Materials are associated (or correlated) with Kingboard Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingboard Chemical has no effect on the direction of Origin Materials i.e., Origin Materials and Kingboard Chemical go up and down completely randomly.
Pair Corralation between Origin Materials and Kingboard Chemical
Given the investment horizon of 90 days Origin Materials is expected to under-perform the Kingboard Chemical. In addition to that, Origin Materials is 4.8 times more volatile than Kingboard Chemical Holdings. It trades about -0.01 of its total potential returns per unit of risk. Kingboard Chemical Holdings is currently generating about -0.02 per unit of volatility. If you would invest 1,399 in Kingboard Chemical Holdings on October 30, 2024 and sell it today you would lose (234.00) from holding Kingboard Chemical Holdings or give up 16.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Materials vs. Kingboard Chemical Holdings
Performance |
| Timeline |
| Origin Materials |
| Kingboard Chemical |
Origin Materials and Kingboard Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Materials and Kingboard Chemical
The main advantage of trading using opposite Origin Materials and Kingboard Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Materials position performs unexpectedly, Kingboard Chemical 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 Kingboard Chemical will offset losses from the drop in Kingboard Chemical's long position.| Origin Materials vs. Tronox Holdings PLC | Origin Materials vs. Valhi Inc | Origin Materials vs. Lsb Industries | Origin Materials vs. Huntsman |
| Kingboard Chemical vs. SBM Offshore NV | Kingboard Chemical vs. Brandywine Realty Trust | Kingboard Chemical vs. China Tontine Wines | Kingboard Chemical vs. Allegion PLC |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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