Correlation Between Applied Digital and Kimberly Clark

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

By analyzing existing cross correlation between Applied Digital and Kimberly Clark de Mexico, you can compare the effects of market volatilities on Applied Digital and Kimberly Clark 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 Applied Digital with a short position of Kimberly Clark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Digital and Kimberly Clark.

Diversification Opportunities for Applied Digital and Kimberly Clark

-0.29

Correlation Coefficient

Applied Digital  Kimberly Clark

Very good diversification

The 3 months correlation between Applied and Kimberly is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Applied Digital and Kimberly Clark de Mexico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimberly Clark de and Applied Digital 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 Applied Digital are associated (or correlated) with Kimberly Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimberly Clark de has no effect on the direction of Applied Digital i.e., Applied Digital and Kimberly Clark go up and down completely randomly.

Pair Corralation between Applied Digital and Kimberly Clark

Given the investment horizon of 90 days Applied Digital is expected to generate 3.86 times more return on investment than Kimberly Clark. However, Applied Digital is 3.86 times more volatile than Kimberly Clark de Mexico. It trades about 0.04 of its potential returns per unit of risk. Kimberly Clark de Mexico is currently generating about -0.02 per unit of risk. If you would invest  871.00  in Applied Digital on October 20, 2024 and sell it today you would earn a total of  19.00  from holding Applied Digital or generate 2.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Applied Digital  vs.  Kimberly Clark de Mexico

Applied Digital

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Digital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Kimberly Clark de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kimberly Clark de Mexico has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Kimberly Clark is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Applied Digital and Kimberly Clark

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

The idea behind Applied Digital and Kimberly Clark de Mexico 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.