Correlation Between Kinik and Kaulin Mfg

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

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

Diversification Opportunities for Kinik and Kaulin Mfg

0.32

Correlation Coefficient

Kinik  Kaulin Mfg

Weak diversification

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

Pair Corralation between Kinik and Kaulin Mfg

Assuming the 90 days trading horizon Kinik Co is expected to generate 1.54 times more return on investment than Kaulin Mfg. However, Kinik is 1.54 times more volatile than Kaulin Mfg. It trades about 0.06 of its potential returns per unit of risk. Kaulin Mfg is currently generating about -0.13 per unit of risk. If you would invest  29,400  in Kinik Co on October 23, 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

Kinik Co  vs.  Kaulin Mfg

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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.

Pair Trading with Kinik and Kaulin Mfg

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

The idea behind Kinik Co and Kaulin Mfg 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.