Correlation Between Vestas Wind and KINGBOARD CHEMICAL
Can any of the company-specific risk be diversified away by investing in both Vestas Wind 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 Vestas Wind and KINGBOARD CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vestas Wind Systems and KINGBOARD CHEMICAL, you can compare the effects of market volatilities on Vestas Wind 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 Vestas Wind with a short position of KINGBOARD CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and KINGBOARD CHEMICAL.
Diversification Opportunities for Vestas Wind and KINGBOARD CHEMICAL
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vestas and KINGBOARD is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and KINGBOARD CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGBOARD CHEMICAL and Vestas Wind 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 Vestas Wind Systems 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 Vestas Wind i.e., Vestas Wind and KINGBOARD CHEMICAL go up and down completely randomly.
Pair Corralation between Vestas Wind and KINGBOARD CHEMICAL
Assuming the 90 days trading horizon Vestas Wind Systems is expected to under-perform the KINGBOARD CHEMICAL. In addition to that, Vestas Wind is 2.09 times more volatile than KINGBOARD CHEMICAL. It trades about -0.21 of its total potential returns per unit of risk. KINGBOARD CHEMICAL is currently generating about 0.05 per unit of volatility. If you would invest 224.00 in KINGBOARD CHEMICAL on September 5, 2024 and sell it today you would earn a total of 4.00 from holding KINGBOARD CHEMICAL or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vestas Wind Systems vs. KINGBOARD CHEMICAL
Performance |
| Timeline |
| Vestas Wind Systems |
| KINGBOARD CHEMICAL |
Vestas Wind and KINGBOARD CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and KINGBOARD CHEMICAL
The main advantage of trading using opposite Vestas Wind and KINGBOARD CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind 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.| Vestas Wind vs. KINGBOARD CHEMICAL | Vestas Wind vs. WESTLAKE CHEMICAL | Vestas Wind vs. PTT Global Chemical | Vestas Wind vs. CEOTRONICS |
| KINGBOARD CHEMICAL vs. TOTAL GABON | KINGBOARD CHEMICAL vs. Walgreens Boots Alliance | KINGBOARD CHEMICAL vs. Peak Resources 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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