Correlation Between King Slide and Eclat Textile

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

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

Diversification Opportunities for King Slide and Eclat Textile

0.01

Correlation Coefficient

King Slide  Eclat Textile

Significant diversification

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

Pair Corralation between King Slide and Eclat Textile

Assuming the 90 days trading horizon King Slide Works is expected to generate 1.95 times more return on investment than Eclat Textile. However, King Slide is 1.95 times more volatile than Eclat Textile Co. It trades about 0.16 of its potential returns per unit of risk. Eclat Textile Co is currently generating about -0.01 per unit of risk. If you would invest  145,000  in King Slide Works on December 24, 2024 and sell it today you would earn a total of  41,500  from holding King Slide Works or generate 28.62% return on investment over 90 days.

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

King Slide Works  vs.  Eclat Textile Co

King Slide Works

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in King Slide Works are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, King Slide showed solid returns over the last few months and may actually be approaching a breakup point.

Eclat Textile

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eclat Textile Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Eclat Textile 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 King Slide and Eclat Textile

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

The idea behind King Slide Works and Eclat Textile 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.