Correlation Between Brikor and Kap Industrial

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

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

Diversification Opportunities for Brikor and Kap Industrial

-0.09

Correlation Coefficient

Brikor  Kap Industrial

Good diversification

The 3 months correlation between Brikor and Kap is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Brikor and Kap Industrial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kap Industrial Holdings and Brikor 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 Brikor are associated (or correlated) with Kap Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kap Industrial Holdings has no effect on the direction of Brikor i.e., Brikor and Kap Industrial go up and down completely randomly.

Pair Corralation between Brikor and Kap Industrial

Assuming the 90 days trading horizon Brikor is expected to under-perform the Kap Industrial. In addition to that, Brikor is 1.67 times more volatile than Kap Industrial Holdings. It trades about -0.26 of its total potential returns per unit of risk. Kap Industrial Holdings is currently generating about -0.07 per unit of volatility. If you would invest  31,100  in Kap Industrial Holdings on September 27, 2024 and sell it today you would lose (1,000.00) from holding Kap Industrial Holdings or give up 3.22% of portfolio value over 90 days.

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

Brikor  vs.  Kap Industrial Holdings

Brikor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brikor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Brikor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kap Industrial Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Brikor and Kap Industrial

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

The idea behind Brikor and Kap Industrial Holdings 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.