Correlation Between Catalyst Metals and Kingboard Chemical

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

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

Diversification Opportunities for Catalyst Metals and Kingboard Chemical

-0.53

Correlation Coefficient

Catalyst Metals  Kingboard Chemical

Excellent diversification

The 3 months correlation between Catalyst and Kingboard is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Metals Limited and Kingboard Chemical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingboard Chemical and Catalyst Metals 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 Catalyst Metals Limited are associated (or correlated) with Kingboard Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingboard Chemical has no effect on the direction of Catalyst Metals i.e., Catalyst Metals and Kingboard Chemical go up and down completely randomly.

Pair Corralation between Catalyst Metals and Kingboard Chemical

Assuming the 90 days horizon Catalyst Metals Limited is expected to under-perform the Kingboard Chemical. In addition to that, Catalyst Metals is 17.22 times more volatile than Kingboard Chemical Holdings. It trades about -0.03 of its total potential returns per unit of risk. Kingboard Chemical Holdings is currently generating about 0.13 per unit of volatility. If you would invest  1,139  in Kingboard Chemical Holdings on October 11, 2024 and sell it today you would earn a total of  26.00  from holding Kingboard Chemical Holdings or generate 2.28% return on investment over 90 days.

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

Catalyst Metals Limited  vs.  Kingboard Chemical Holdings

Catalyst Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Kingboard Chemical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kingboard Chemical Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Kingboard Chemical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Catalyst Metals and Kingboard Chemical

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

The idea behind Catalyst Metals Limited and Kingboard Chemical 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.