Correlation Between KPX Green and Infinitt Healthcare

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

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

Diversification Opportunities for KPX Green and Infinitt Healthcare

-0.01

Correlation Coefficient

KPX Green  Infinitt Healthcare

Good diversification

The 3 months correlation between KPX and Infinitt is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding KPX Green Chemical and Infinitt Healthcare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinitt Healthcare and KPX Green 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 KPX Green Chemical are associated (or correlated) with Infinitt Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinitt Healthcare has no effect on the direction of KPX Green i.e., KPX Green and Infinitt Healthcare go up and down completely randomly.

Pair Corralation between KPX Green and Infinitt Healthcare

Assuming the 90 days trading horizon KPX Green is expected to generate 31.81 times less return on investment than Infinitt Healthcare. But when comparing it to its historical volatility, KPX Green Chemical is 1.43 times less risky than Infinitt Healthcare. It trades about 0.0 of its potential returns per unit of risk. Infinitt Healthcare Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  420,000  in Infinitt Healthcare Co on December 24, 2024 and sell it today you would earn a total of  84,000  from holding Infinitt Healthcare Co or generate 20.0% return on investment over 90 days.

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

KPX Green Chemical  vs.  Infinitt Healthcare Co

KPX Green Chemical

Risk-Adjusted Performance

Very Weak

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

Infinitt Healthcare

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Infinitt Healthcare Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Infinitt Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KPX Green and Infinitt Healthcare

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

The idea behind KPX Green Chemical and Infinitt Healthcare 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.