Correlation Between Exchange Income and KDA
Can any of the company-specific risk be diversified away by investing in both Exchange Income and KDA 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 Exchange Income and KDA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exchange Income and KDA Group, you can compare the effects of market volatilities on Exchange Income and KDA 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 Exchange Income with a short position of KDA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Income and KDA.
Diversification Opportunities for Exchange Income and KDA
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Exchange and KDA is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Income and KDA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDA Group and Exchange Income 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 Exchange Income are associated (or correlated) with KDA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDA Group has no effect on the direction of Exchange Income i.e., Exchange Income and KDA go up and down completely randomly.
Pair Corralation between Exchange Income and KDA
Assuming the 90 days trading horizon Exchange Income is expected to under-perform the KDA. But the stock apears to be less risky and, when comparing its historical volatility, Exchange Income is 3.54 times less risky than KDA. The stock trades about -0.19 of its potential returns per unit of risk. The KDA Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 29.00 in KDA Group on December 28, 2024 and sell it today you would lose (4.00) from holding KDA Group or give up 13.79% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Exchange Income vs. KDA Group
Performance |
Timeline |
Exchange Income |
KDA Group |
Exchange Income and KDA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Exchange Income and KDA
The main advantage of trading using opposite Exchange Income and KDA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exchange Income position performs unexpectedly, KDA 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 KDA will offset losses from the drop in KDA's long position.Exchange Income vs. Capital Power | Exchange Income vs. Keyera Corp | Exchange Income vs. Parkland Fuel | Exchange Income vs. TFI International |
Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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