Correlation Between Com7 PCL and Kingsmen CMTI

Can any of the company-specific risk be diversified away by investing in both Com7 PCL and Kingsmen CMTI 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 Com7 PCL and Kingsmen CMTI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Com7 PCL and Kingsmen CMTI Public, you can compare the effects of market volatilities on Com7 PCL and Kingsmen CMTI 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 Com7 PCL with a short position of Kingsmen CMTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Com7 PCL and Kingsmen CMTI.

Diversification Opportunities for Com7 PCL and Kingsmen CMTI

-0.71

Correlation Coefficient

Com7 PCL  Kingsmen CMTI

Pay attention - limited upside

The 3 months correlation between Com7 and Kingsmen is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Com7 PCL and Kingsmen CMTI Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsmen CMTI Public and Com7 PCL 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 Com7 PCL are associated (or correlated) with Kingsmen CMTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsmen CMTI Public has no effect on the direction of Com7 PCL i.e., Com7 PCL and Kingsmen CMTI go up and down completely randomly.

Pair Corralation between Com7 PCL and Kingsmen CMTI

Assuming the 90 days trading horizon Com7 PCL is expected to under-perform the Kingsmen CMTI. But the stock apears to be less risky and, when comparing its historical volatility, Com7 PCL is 1.16 times less risky than Kingsmen CMTI. The stock trades about -0.19 of its potential returns per unit of risk. The Kingsmen CMTI Public is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  121.00  in Kingsmen CMTI Public on December 29, 2024 and sell it today you would earn a total of  24.00  from holding Kingsmen CMTI Public or generate 19.83% return on investment over 90 days.

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

Com7 PCL  vs.  Kingsmen CMTI Public

Com7 PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Com7 PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Kingsmen CMTI Public

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsmen CMTI Public are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Kingsmen CMTI disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Com7 PCL and Kingsmen CMTI

The main advantage of trading using opposite Com7 PCL and Kingsmen CMTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Com7 PCL position performs unexpectedly, Kingsmen CMTI 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 Kingsmen CMTI will offset losses from the drop in Kingsmen CMTI's long position.

The idea behind Com7 PCL and Kingsmen CMTI Public 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.