Correlation Between Kaulin Mfg and Kinik

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

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

Diversification Opportunities for Kaulin Mfg and Kinik

0.32

Correlation Coefficient

Kaulin Mfg  Kinik

Weak diversification

The 3 months correlation between Kaulin and Kinik is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Kaulin Mfg and Kinik Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinik and Kaulin Mfg 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 Kaulin Mfg are associated (or correlated) with Kinik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinik has no effect on the direction of Kaulin Mfg i.e., Kaulin Mfg and Kinik go up and down completely randomly.

Pair Corralation between Kaulin Mfg and Kinik

Assuming the 90 days trading horizon Kaulin Mfg is expected to under-perform the Kinik. But the stock apears to be less risky and, when comparing its historical volatility, Kaulin Mfg is 1.54 times less risky than Kinik. The stock trades about -0.13 of its potential returns per unit of risk. The Kinik Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  29,400  in Kinik Co on October 24, 2024 and sell it today you would earn a total of  650.00  from holding Kinik Co or generate 2.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kaulin Mfg  vs.  Kinik Co

Kaulin Mfg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaulin Mfg has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Kaulin Mfg is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Kinik

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinik Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Kaulin Mfg and Kinik

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

The idea behind Kaulin Mfg and Kinik 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.