Correlation Between National Retail and KINGBOARD CHEMICAL

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

By analyzing existing cross correlation between National Retail Properties and KINGBOARD CHEMICAL, you can compare the effects of market volatilities on National Retail 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 National Retail with a short position of KINGBOARD CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and KINGBOARD CHEMICAL.

Diversification Opportunities for National Retail and KINGBOARD CHEMICAL

-0.25

Correlation Coefficient

National Retail  KINGBOARD CHEMICAL

Very good diversification

The 3 months correlation between National and KINGBOARD is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and KINGBOARD CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGBOARD CHEMICAL and National Retail 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 National Retail Properties 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 National Retail i.e., National Retail and KINGBOARD CHEMICAL go up and down completely randomly.

Pair Corralation between National Retail and KINGBOARD CHEMICAL

Assuming the 90 days trading horizon National Retail Properties is expected to under-perform the KINGBOARD CHEMICAL. But the stock apears to be less risky and, when comparing its historical volatility, National Retail Properties is 2.16 times less risky than KINGBOARD CHEMICAL. The stock trades about -0.06 of its potential returns per unit of risk. The KINGBOARD CHEMICAL is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  148.00  in KINGBOARD CHEMICAL on September 17, 2024 and sell it today you would earn a total of  50.00  from holding KINGBOARD CHEMICAL or generate 33.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

National Retail Properties  vs.  KINGBOARD CHEMICAL

National Retail Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Retail Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, National Retail is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

KINGBOARD CHEMICAL

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KINGBOARD CHEMICAL are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, KINGBOARD CHEMICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Retail and KINGBOARD CHEMICAL

The main advantage of trading using opposite National Retail and KINGBOARD CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail 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 National Retail Properties and KINGBOARD CHEMICAL 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.