Correlation Between TKB Critical and Kingswood Acquisition
Can any of the company-specific risk be diversified away by investing in both TKB Critical and Kingswood Acquisition 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 TKB Critical and Kingswood Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TKB Critical Technologies and Kingswood Acquisition Corp, you can compare the effects of market volatilities on TKB Critical and Kingswood Acquisition 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 TKB Critical with a short position of Kingswood Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of TKB Critical and Kingswood Acquisition.
Diversification Opportunities for TKB Critical and Kingswood Acquisition
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TKB and Kingswood is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding TKB Critical Technologies and Kingswood Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingswood Acquisition and TKB Critical 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 TKB Critical Technologies are associated (or correlated) with Kingswood Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingswood Acquisition has no effect on the direction of TKB Critical i.e., TKB Critical and Kingswood Acquisition go up and down completely randomly.
Pair Corralation between TKB Critical and Kingswood Acquisition
If you would invest 0.82 in Kingswood Acquisition Corp on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Kingswood Acquisition Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TKB Critical Technologies vs. Kingswood Acquisition Corp
Performance |
| Timeline |
| TKB Critical Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kingswood Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
TKB Critical and Kingswood Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TKB Critical and Kingswood Acquisition
The main advantage of trading using opposite TKB Critical and Kingswood Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TKB Critical position performs unexpectedly, Kingswood Acquisition 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 Kingswood Acquisition will offset losses from the drop in Kingswood Acquisition's long position.The idea behind TKB Critical Technologies and Kingswood Acquisition Corp 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.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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