Correlation Between Glanbia PLC and Kenmare Resources

Can any of the company-specific risk be diversified away by investing in both Glanbia PLC and Kenmare Resources 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 Glanbia PLC and Kenmare Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Glanbia PLC and Kenmare Resources

-0.62

Correlation Coefficient

Glanbia PLC  Kenmare Resources

Excellent diversification

The 3 months correlation between Glanbia and Kenmare is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Glanbia PLC and Kenmare Resources PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenmare Resources PLC and Glanbia PLC 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 Glanbia PLC are associated (or correlated) with Kenmare Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenmare Resources PLC has no effect on the direction of Glanbia PLC i.e., Glanbia PLC and Kenmare Resources go up and down completely randomly.

Pair Corralation between Glanbia PLC and Kenmare Resources

Assuming the 90 days trading horizon Glanbia PLC is expected to under-perform the Kenmare Resources. But the stock apears to be less risky and, when comparing its historical volatility, Glanbia PLC is 1.06 times less risky than Kenmare Resources. The stock trades about -0.16 of its potential returns per unit of risk. The Kenmare Resources PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  387.00  in Kenmare Resources PLC on September 13, 2024 and sell it today you would earn a total of  33.00  from holding Kenmare Resources PLC or generate 8.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Glanbia PLC  vs.  Kenmare Resources PLC

Glanbia PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glanbia PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Kenmare Resources PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kenmare Resources PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Kenmare Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Glanbia PLC and Kenmare Resources

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

The idea behind Glanbia PLC and Kenmare Resources PLC 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.