Correlation Between Glanbia PLC and Kingspan Group

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

By analyzing existing cross correlation between Glanbia PLC and Kingspan Group plc, you can compare the effects of market volatilities on Glanbia PLC and Kingspan Group 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 Kingspan Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glanbia PLC and Kingspan Group.

Diversification Opportunities for Glanbia PLC and Kingspan Group

0.51

Correlation Coefficient

Glanbia PLC  Kingspan Group

Very weak diversification

The 3 months correlation between Glanbia and Kingspan is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Glanbia PLC and Kingspan Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingspan Group 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 Kingspan Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingspan Group plc has no effect on the direction of Glanbia PLC i.e., Glanbia PLC and Kingspan Group go up and down completely randomly.

Pair Corralation between Glanbia PLC and Kingspan Group

Assuming the 90 days trading horizon Glanbia PLC is expected to generate 0.99 times more return on investment than Kingspan Group. However, Glanbia PLC is 1.01 times less risky than Kingspan Group. It trades about -0.08 of its potential returns per unit of risk. Kingspan Group plc is currently generating about -0.09 per unit of risk. If you would invest  1,600  in Glanbia PLC on August 30, 2024 and sell it today you would lose (145.00) from holding Glanbia PLC or give up 9.06% of portfolio value over 90 days.

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

Glanbia PLC  vs.  Kingspan Group 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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Kingspan Group plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingspan Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Glanbia PLC and Kingspan Group

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

The idea behind Glanbia PLC and Kingspan Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.