Correlation Between Diageo Plc and KENEDIX OFFICE

Can any of the company-specific risk be diversified away by investing in both Diageo Plc and KENEDIX OFFICE 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 Diageo Plc and KENEDIX OFFICE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Diageo plc and KENEDIX OFFICE INV, you can compare the effects of market volatilities on Diageo Plc and KENEDIX OFFICE 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 Diageo Plc with a short position of KENEDIX OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo Plc and KENEDIX OFFICE.

Diversification Opportunities for Diageo Plc and KENEDIX OFFICE

0.33

Correlation Coefficient

Diageo Plc  KENEDIX OFFICE

Weak diversification

The 3 months correlation between Diageo and KENEDIX is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Diageo plc and KENEDIX OFFICE INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENEDIX OFFICE INV and Diageo 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 Diageo plc are associated (or correlated) with KENEDIX OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENEDIX OFFICE INV has no effect on the direction of Diageo Plc i.e., Diageo Plc and KENEDIX OFFICE go up and down completely randomly.

Pair Corralation between Diageo Plc and KENEDIX OFFICE

Assuming the 90 days horizon Diageo plc is expected to generate 1.03 times more return on investment than KENEDIX OFFICE. However, Diageo Plc is 1.03 times more volatile than KENEDIX OFFICE INV. It trades about -0.01 of its potential returns per unit of risk. KENEDIX OFFICE INV is currently generating about -0.01 per unit of risk. If you would invest  3,176  in Diageo plc on October 11, 2024 and sell it today you would lose (143.00) from holding Diageo plc or give up 4.5% of portfolio value over 90 days.

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

Diageo plc  vs.  KENEDIX OFFICE INV

Diageo plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

KENEDIX OFFICE INV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KENEDIX OFFICE INV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, KENEDIX OFFICE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Diageo Plc and KENEDIX OFFICE

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

The idea behind Diageo plc and KENEDIX OFFICE INV 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.