Correlation Between Fairfax Financial and Kingstone Companies

Can any of the company-specific risk be diversified away by investing in both Fairfax Financial and Kingstone Companies 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 Fairfax Financial and Kingstone Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Fairfax Financial and Kingstone Companies

0.0

Correlation Coefficient

Fairfax Financial  Kingstone Companies

Pay attention - limited upside

The 3 months correlation between Fairfax and Kingstone is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Kingstone Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingstone Companies and Fairfax Financial 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 Fairfax Financial Holdings are associated (or correlated) with Kingstone Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingstone Companies has no effect on the direction of Fairfax Financial i.e., Fairfax Financial and Kingstone Companies go up and down completely randomly.

Pair Corralation between Fairfax Financial and Kingstone Companies

If you would invest  1,557  in Kingstone Companies on December 30, 2024 and sell it today you would earn a total of  142.00  from holding Kingstone Companies or generate 9.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Fairfax Financial Holdings  vs.  Kingstone Companies

Fairfax Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fairfax Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Fairfax Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Kingstone Companies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kingstone Companies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Kingstone Companies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fairfax Financial and Kingstone Companies

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

The idea behind Fairfax Financial Holdings and Kingstone Companies 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.