Correlation Between Kmw and Intops

Can any of the company-specific risk be diversified away by investing in both Kmw and Intops 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 Kmw and Intops into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kmw Inc and Intops Co, you can compare the effects of market volatilities on Kmw and Intops 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 Kmw with a short position of Intops. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kmw and Intops.

Diversification Opportunities for Kmw and Intops

-0.17

Correlation Coefficient

Kmw  Intops

Good diversification

The 3 months correlation between Kmw and Intops is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Kmw Inc and Intops Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intops and Kmw 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 Kmw Inc are associated (or correlated) with Intops. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intops has no effect on the direction of Kmw i.e., Kmw and Intops go up and down completely randomly.

Pair Corralation between Kmw and Intops

Assuming the 90 days trading horizon Kmw is expected to generate 1.74 times less return on investment than Intops. But when comparing it to its historical volatility, Kmw Inc is 1.02 times less risky than Intops. It trades about 0.11 of its potential returns per unit of risk. Intops Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,681,235  in Intops Co on October 22, 2024 and sell it today you would earn a total of  221,765  from holding Intops Co or generate 13.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kmw Inc  vs.  Intops Co

Kmw Inc

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kmw Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kmw sustained solid returns over the last few months and may actually be approaching a breakup point.

Intops

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intops Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Intops is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kmw and Intops

The main advantage of trading using opposite Kmw and Intops positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kmw position performs unexpectedly, Intops 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 Intops will offset losses from the drop in Intops' long position.

The idea behind Kmw Inc and Intops Co 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.