Correlation Between Vessel and Kia Corp

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

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

Diversification Opportunities for Vessel and Kia Corp

0.06

Correlation Coefficient

Vessel  Kia Corp

Significant diversification

The 3 months correlation between Vessel and Kia is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Vessel Co and Kia Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kia Corp and Vessel 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 Vessel Co are associated (or correlated) with Kia Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kia Corp has no effect on the direction of Vessel i.e., Vessel and Kia Corp go up and down completely randomly.

Pair Corralation between Vessel and Kia Corp

Assuming the 90 days trading horizon Vessel Co is expected to generate 2.12 times more return on investment than Kia Corp. However, Vessel is 2.12 times more volatile than Kia Corp. It trades about 0.19 of its potential returns per unit of risk. Kia Corp is currently generating about 0.24 per unit of risk. If you would invest  18,700  in Vessel Co on October 8, 2024 and sell it today you would earn a total of  1,500  from holding Vessel Co or generate 8.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	55.56%
Values	Daily Returns

Vessel Co  vs.  Kia Corp

Vessel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vessel Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Kia Corp

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Vessel and Kia Corp

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

The idea behind Vessel Co and Kia Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.