Correlation Between Exemplar REITail and Kap Industrial

Can any of the company-specific risk be diversified away by investing in both Exemplar REITail and Kap Industrial 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 Exemplar REITail and Kap Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Exemplar REITail and Kap Industrial Holdings, you can compare the effects of market volatilities on Exemplar REITail and Kap Industrial 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 Exemplar REITail with a short position of Kap Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exemplar REITail and Kap Industrial.

Diversification Opportunities for Exemplar REITail and Kap Industrial

-0.49

Correlation Coefficient

Exemplar REITail  Kap Industrial

Very good diversification

The 3 months correlation between Exemplar and Kap is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Exemplar REITail and Kap Industrial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kap Industrial Holdings and Exemplar REITail 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 Exemplar REITail are associated (or correlated) with Kap Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kap Industrial Holdings has no effect on the direction of Exemplar REITail i.e., Exemplar REITail and Kap Industrial go up and down completely randomly.

Pair Corralation between Exemplar REITail and Kap Industrial

Assuming the 90 days trading horizon Exemplar REITail is expected to generate 39.89 times more return on investment than Kap Industrial. However, Exemplar REITail is 39.89 times more volatile than Kap Industrial Holdings. It trades about 0.1 of its potential returns per unit of risk. Kap Industrial Holdings is currently generating about 0.0 per unit of risk. If you would invest  1,126  in Exemplar REITail on October 23, 2024 and sell it today you would earn a total of  120,074  from holding Exemplar REITail or generate 10663.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Exemplar REITail  vs.  Kap Industrial Holdings

Exemplar REITail

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exemplar REITail are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Exemplar REITail exhibited solid returns over the last few months and may actually be approaching a breakup point.

Kap Industrial Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kap Industrial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Exemplar REITail and Kap Industrial

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

The idea behind Exemplar REITail and Kap Industrial 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.