Correlation Between Kenda Rubber and Iron Force

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

By analyzing existing cross correlation between Kenda Rubber Industrial and Iron Force Industrial, you can compare the effects of market volatilities on Kenda Rubber and Iron Force 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 Kenda Rubber with a short position of Iron Force. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenda Rubber and Iron Force.

Diversification Opportunities for Kenda Rubber and Iron Force

0.57

Correlation Coefficient

Kenda Rubber  Iron Force

Very weak diversification

The 3 months correlation between Kenda and Iron is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Kenda Rubber Industrial and Iron Force Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Force Industrial and Kenda Rubber 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 Kenda Rubber Industrial are associated (or correlated) with Iron Force. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Force Industrial has no effect on the direction of Kenda Rubber i.e., Kenda Rubber and Iron Force go up and down completely randomly.

Pair Corralation between Kenda Rubber and Iron Force

Assuming the 90 days trading horizon Kenda Rubber Industrial is expected to generate 0.83 times more return on investment than Iron Force. However, Kenda Rubber Industrial is 1.21 times less risky than Iron Force. It trades about 0.12 of its potential returns per unit of risk. Iron Force Industrial is currently generating about -0.05 per unit of risk. If you would invest  2,635  in Kenda Rubber Industrial on December 21, 2024 and sell it today you would earn a total of  165.00  from holding Kenda Rubber Industrial or generate 6.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.21%
Values	Daily Returns

Kenda Rubber Industrial  vs.  Iron Force Industrial

Kenda Rubber Industrial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kenda Rubber Industrial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kenda Rubber may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Iron Force Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iron Force Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Iron Force 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 Kenda Rubber and Iron Force

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

The idea behind Kenda Rubber Industrial and Iron Force Industrial 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..