Correlation Between Trust For and KFA Mount

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Can any of the company-specific risk be diversified away by investing in both Trust For and KFA Mount 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 Trust For and KFA Mount into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trust For Professional and KFA Mount Lucas, you can compare the effects of market volatilities on Trust For and KFA Mount 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 Trust For with a short position of KFA Mount. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trust For and KFA Mount.

Diversification Opportunities for Trust For and KFA Mount

TrustKFADiversified AwayTrustKFADiversified Away100%
-0.61
  Correlation Coefficient

Excellent diversification

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

Pair Corralation between Trust For and KFA Mount

Given the investment horizon of 90 days Trust For Professional is expected to generate 1.18 times more return on investment than KFA Mount. However, Trust For is 1.18 times more volatile than KFA Mount Lucas. It trades about 0.1 of its potential returns per unit of risk. KFA Mount Lucas is currently generating about -0.06 per unit of risk. If you would invest  2,197  in Trust For Professional on September 23, 2024 and sell it today you would earn a total of  118.00  from holding Trust For Professional or generate 5.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Trust For Professional  vs.  KFA Mount Lucas

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -50510
JavaScript chart by amCharts 3.21.15CLSE KMLM
       Timeline  
Trust For Professional 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Trust For Professional are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Trust For is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec2222.52323.524
KFA Mount Lucas 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days KFA Mount Lucas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, KFA Mount is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec27.52828.52929.5

Trust For and KFA Mount Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.71-2.03-1.35-0.67-0.01130.71.412.132.853.57 0.10.20.30.40.50.60.7
JavaScript chart by amCharts 3.21.15CLSE KMLM
       Returns  

Pair Trading with Trust For and KFA Mount

The main advantage of trading using opposite Trust For and KFA Mount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trust For position performs unexpectedly, KFA Mount 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 KFA Mount will offset losses from the drop in KFA Mount's long position.
The idea behind Trust For Professional and KFA Mount Lucas 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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