Correlation Between Discount Print and Kelly Services

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

By analyzing existing cross correlation between Discount Print USA and Kelly Services A, you can compare the effects of market volatilities on Discount Print and Kelly Services 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 Discount Print with a short position of Kelly Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discount Print and Kelly Services.

Diversification Opportunities for Discount Print and Kelly Services

0.2

Correlation Coefficient

Discount Print  Kelly Services

Modest diversification

The 3 months correlation between Discount and Kelly is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Discount Print USA and Kelly Services A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kelly Services A and Discount Print 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 Discount Print USA are associated (or correlated) with Kelly Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kelly Services A has no effect on the direction of Discount Print i.e., Discount Print and Kelly Services go up and down completely randomly.

Pair Corralation between Discount Print and Kelly Services

Given the investment horizon of 90 days Discount Print USA is expected to generate 13.4 times more return on investment than Kelly Services. However, Discount Print is 13.4 times more volatile than Kelly Services A. It trades about 0.15 of its potential returns per unit of risk. Kelly Services A is currently generating about 0.01 per unit of risk. If you would invest  0.01  in Discount Print USA on December 29, 2024 and sell it today you would earn a total of  0.01  from holding Discount Print USA or generate 100.0% return on investment over 90 days.

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

Discount Print USA  vs.  Kelly Services A

Discount Print USA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Discount Print USA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly sluggish basic indicators, Discount Print demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Kelly Services A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kelly Services A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kelly Services is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Discount Print and Kelly Services

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

The idea behind Discount Print USA and Kelly Services A 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.