Correlation Between Global Indemnity and Kingstone Companies

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

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

Diversification Opportunities for Global Indemnity and Kingstone Companies

-0.07

Correlation Coefficient

Global Indemnity  Kingstone Companies

Good diversification

The 3 months correlation between Global and Kingstone is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Global Indemnity PLC and Kingstone Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingstone Companies and Global Indemnity 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 Global Indemnity PLC 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 Global Indemnity i.e., Global Indemnity and Kingstone Companies go up and down completely randomly.

Pair Corralation between Global Indemnity and Kingstone Companies

Given the investment horizon of 90 days Global Indemnity PLC is expected to under-perform the Kingstone Companies. But the stock apears to be less risky and, when comparing its historical volatility, Global Indemnity PLC is 2.19 times less risky than Kingstone Companies. The stock trades about -0.03 of its potential returns per unit of risk. The Kingstone Companies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,557  in Kingstone Companies on December 29, 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	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Global Indemnity PLC  vs.  Kingstone Companies

Global Indemnity PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Indemnity PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Global Indemnity is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

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 Global Indemnity and Kingstone Companies

The main advantage of trading using opposite Global Indemnity and Kingstone Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Indemnity 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 Global Indemnity PLC 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.