Correlation Between 456680 and KIM KINDEX

Can any of the company-specific risk be diversified away by investing in both 456680 and KIM KINDEX 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 456680 and KIM KINDEX into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 456680 and KIM KINDEX 200TotalReturn, you can compare the effects of market volatilities on 456680 and KIM KINDEX 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 456680 with a short position of KIM KINDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of 456680 and KIM KINDEX.

Diversification Opportunities for 456680 and KIM KINDEX

-0.45

Correlation Coefficient

456680  KIM KINDEX

Very good diversification

The 3 months correlation between 456680 and KIM is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding 456680 and KIM KINDEX 200TotalReturn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIM KINDEX 200TotalReturn and 456680 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 456680 are associated (or correlated) with KIM KINDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIM KINDEX 200TotalReturn has no effect on the direction of 456680 i.e., 456680 and KIM KINDEX go up and down completely randomly.

Pair Corralation between 456680 and KIM KINDEX

Assuming the 90 days trading horizon 456680 is expected to generate 3.99 times more return on investment than KIM KINDEX. However, 456680 is 3.99 times more volatile than KIM KINDEX 200TotalReturn. It trades about 0.16 of its potential returns per unit of risk. KIM KINDEX 200TotalReturn is currently generating about -0.07 per unit of risk. If you would invest  397,500  in 456680 on September 25, 2024 and sell it today you would earn a total of  203,000  from holding 456680 or generate 51.07% return on investment over 90 days.

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

456680  vs.  KIM KINDEX 200TotalReturn

456680

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 456680 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 456680 sustained solid returns over the last few months and may actually be approaching a breakup point.

KIM KINDEX 200TotalReturn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KIM KINDEX 200TotalReturn has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KIM KINDEX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 456680 and KIM KINDEX

The main advantage of trading using opposite 456680 and KIM KINDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 456680 position performs unexpectedly, KIM KINDEX 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 KIM KINDEX will offset losses from the drop in KIM KINDEX's long position.

The idea behind 456680 and KIM KINDEX 200TotalReturn 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.