Correlation Between Inwido AB and Kingspan Group

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

By analyzing existing cross correlation between Inwido AB and Kingspan Group plc, you can compare the effects of market volatilities on Inwido AB and Kingspan Group 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 Inwido AB with a short position of Kingspan Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inwido AB and Kingspan Group.

Diversification Opportunities for Inwido AB and Kingspan Group

0.27

Correlation Coefficient

Inwido AB  Kingspan Group

Modest diversification

The 3 months correlation between Inwido and Kingspan is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Inwido AB and Kingspan Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingspan Group plc and Inwido AB 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 Inwido AB are associated (or correlated) with Kingspan Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingspan Group plc has no effect on the direction of Inwido AB i.e., Inwido AB and Kingspan Group go up and down completely randomly.

Pair Corralation between Inwido AB and Kingspan Group

Assuming the 90 days horizon Inwido AB is expected to generate 3.42 times more return on investment than Kingspan Group. However, Inwido AB is 3.42 times more volatile than Kingspan Group plc. It trades about 0.09 of its potential returns per unit of risk. Kingspan Group plc is currently generating about 0.0 per unit of risk. If you would invest  418.00  in Inwido AB on October 5, 2024 and sell it today you would earn a total of  1,159  from holding Inwido AB or generate 277.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.68%
Values	Daily Returns

Inwido AB  vs.  Kingspan Group plc

Inwido AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inwido AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Inwido AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Kingspan Group plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingspan Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Inwido AB and Kingspan Group

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

The idea behind Inwido AB and Kingspan Group plc 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 CEOs Directory module to screen CEOs from public companies around the world.