Correlation Between Solution Financial and KDA
Can any of the company-specific risk be diversified away by investing in both Solution Financial and KDA 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 Solution Financial and KDA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Financial and KDA Group, you can compare the effects of market volatilities on Solution Financial and KDA 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 Solution Financial with a short position of KDA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Financial and KDA.
Diversification Opportunities for Solution Financial and KDA
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Solution and KDA is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Solution Financial and KDA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDA Group and Solution Financial 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 Solution Financial are associated (or correlated) with KDA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDA Group has no effect on the direction of Solution Financial i.e., Solution Financial and KDA go up and down completely randomly.
Pair Corralation between Solution Financial and KDA
Assuming the 90 days trading horizon Solution Financial is expected to under-perform the KDA. But the stock apears to be less risky and, when comparing its historical volatility, Solution Financial is 2.29 times less risky than KDA. The stock trades about -0.02 of its potential returns per unit of risk. The KDA Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 25.00 in KDA Group on November 6, 2024 and sell it today you would earn a total of 1.00 from holding KDA Group or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Financial vs. KDA Group
Performance |
| Timeline |
| Solution Financial |
| KDA Group |
Solution Financial and KDA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Financial and KDA
The main advantage of trading using opposite Solution Financial and KDA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Financial position performs unexpectedly, KDA 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 KDA will offset losses from the drop in KDA's long position.| Solution Financial vs. T2 Metals Corp | Solution Financial vs. Giga Metals Corp | Solution Financial vs. XXIX Metal Corp | Solution Financial vs. Computer Modelling Group |
| KDA vs. Contagious Gaming | KDA vs. Atrium Mortgage Investment | KDA vs. Plaza Retail REIT | KDA vs. Solid Impact Investments |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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