Correlation Between LEENO Industrial and Kmw

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

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

Diversification Opportunities for LEENO Industrial and Kmw

-0.56

Correlation Coefficient

LEENO Industrial  Kmw

Excellent diversification

The 3 months correlation between LEENO and Kmw is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding LEENO Industrial and Kmw Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kmw Inc and LEENO Industrial 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 LEENO Industrial are associated (or correlated) with Kmw. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kmw Inc has no effect on the direction of LEENO Industrial i.e., LEENO Industrial and Kmw go up and down completely randomly.

Pair Corralation between LEENO Industrial and Kmw

Assuming the 90 days trading horizon LEENO Industrial is expected to generate 0.95 times more return on investment than Kmw. However, LEENO Industrial is 1.06 times less risky than Kmw. It trades about 0.36 of its potential returns per unit of risk. Kmw Inc is currently generating about -0.06 per unit of risk. If you would invest  15,350,000  in LEENO Industrial on September 22, 2024 and sell it today you would earn a total of  3,680,000  from holding LEENO Industrial or generate 23.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

LEENO Industrial  vs.  Kmw Inc

LEENO Industrial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LEENO Industrial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, LEENO Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kmw Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kmw Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kmw may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with LEENO Industrial and Kmw

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

The idea behind LEENO Industrial and Kmw Inc 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.