Correlation Between LEGACY IRON and KENEDIX OFFICE

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

By analyzing existing cross correlation between LEGACY IRON ORE and KENEDIX OFFICE INV, you can compare the effects of market volatilities on LEGACY IRON and KENEDIX OFFICE 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 LEGACY IRON with a short position of KENEDIX OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEGACY IRON and KENEDIX OFFICE.

Diversification Opportunities for LEGACY IRON and KENEDIX OFFICE

0.61

Correlation Coefficient

LEGACY IRON  KENEDIX OFFICE

Poor diversification

The 3 months correlation between LEGACY and KENEDIX is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding LEGACY IRON ORE and KENEDIX OFFICE INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENEDIX OFFICE INV and LEGACY IRON 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 LEGACY IRON ORE are associated (or correlated) with KENEDIX OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENEDIX OFFICE INV has no effect on the direction of LEGACY IRON i.e., LEGACY IRON and KENEDIX OFFICE go up and down completely randomly.

Pair Corralation between LEGACY IRON and KENEDIX OFFICE

Assuming the 90 days trading horizon LEGACY IRON ORE is expected to generate 0.98 times more return on investment than KENEDIX OFFICE. However, LEGACY IRON ORE is 1.02 times less risky than KENEDIX OFFICE. It trades about -0.13 of its potential returns per unit of risk. KENEDIX OFFICE INV is currently generating about -0.13 per unit of risk. If you would invest  1.16  in LEGACY IRON ORE on September 13, 2024 and sell it today you would lose (0.11) from holding LEGACY IRON ORE or give up 9.48% of portfolio value over 90 days.

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

LEGACY IRON ORE  vs.  KENEDIX OFFICE INV

LEGACY IRON ORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LEGACY IRON ORE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

KENEDIX OFFICE INV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KENEDIX OFFICE INV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with LEGACY IRON and KENEDIX OFFICE

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

The idea behind LEGACY IRON ORE and KENEDIX OFFICE INV 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.