Correlation Between Exco Technologies and K Bro
Can any of the company-specific risk be diversified away by investing in both Exco Technologies and K Bro 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 Exco Technologies and K Bro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exco Technologies Limited and K Bro Linen, you can compare the effects of market volatilities on Exco Technologies and K Bro 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 Exco Technologies with a short position of K Bro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exco Technologies and K Bro.
Diversification Opportunities for Exco Technologies and K Bro
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Exco and KBL is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Exco Technologies Limited and K Bro Linen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Bro Linen and Exco Technologies 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 Exco Technologies Limited are associated (or correlated) with K Bro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Bro Linen has no effect on the direction of Exco Technologies i.e., Exco Technologies and K Bro go up and down completely randomly.
Pair Corralation between Exco Technologies and K Bro
Assuming the 90 days trading horizon Exco Technologies is expected to generate 1.15 times less return on investment than K Bro. In addition to that, Exco Technologies is 1.18 times more volatile than K Bro Linen. It trades about 0.04 of its total potential returns per unit of risk. K Bro Linen is currently generating about 0.05 per unit of volatility. If you would invest 2,699 in K Bro Linen on August 28, 2024 and sell it today you would earn a total of 1,001 from holding K Bro Linen or generate 37.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exco Technologies Limited vs. K Bro Linen
Performance |
| Timeline |
| Exco Technologies |
| K Bro Linen |
Exco Technologies and K Bro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exco Technologies and K Bro
The main advantage of trading using opposite Exco Technologies and K Bro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exco Technologies position performs unexpectedly, K Bro 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 K Bro will offset losses from the drop in K Bro's long position.| Exco Technologies vs. Transcontinental | Exco Technologies vs. Methanex | Exco Technologies vs. Stella Jones | Exco Technologies vs. High Liner Foods |
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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