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

Exchange Income  KDA

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

Exchange Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exchange Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

KDA Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days KDA Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

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.

The idea behind Exchange Income and KDA Group 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.