Correlation Between Chemtrade Logistics and KDA

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

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

Diversification Opportunities for Chemtrade Logistics and KDA

0.13

Correlation Coefficient

Chemtrade Logistics  KDA

Average diversification

The 3 months correlation between Chemtrade and KDA is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Chemtrade Logistics Income and KDA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDA Group and Chemtrade Logistics 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 Chemtrade Logistics Income are associated (or correlated) with KDA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDA Group has no effect on the direction of Chemtrade Logistics i.e., Chemtrade Logistics and KDA go up and down completely randomly.

Pair Corralation between Chemtrade Logistics and KDA

Assuming the 90 days trading horizon Chemtrade Logistics Income is expected to under-perform the KDA. But the stock apears to be less risky and, when comparing its historical volatility, Chemtrade Logistics Income is 2.9 times less risky than KDA. The stock trades about -0.09 of its potential returns per unit of risk. The KDA Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  29.00  in KDA Group on December 29, 2024 and sell it today you would lose (3.00) from holding KDA Group or give up 10.34% of portfolio value over 90 days.

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

Chemtrade Logistics Income  vs.  KDA Group

Chemtrade Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chemtrade Logistics Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

KDA Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days KDA Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, KDA is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chemtrade Logistics and KDA

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

The idea behind Chemtrade Logistics Income and KDA Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.