Correlation Between Hydrotek Public and Kingsmen CMTI

Can any of the company-specific risk be diversified away by investing in both Hydrotek Public and Kingsmen CMTI 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 Hydrotek Public and Kingsmen CMTI into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Hydrotek Public and Kingsmen CMTI

0.03

Correlation Coefficient

Hydrotek Public  Kingsmen CMTI

Significant diversification

The 3 months correlation between Hydrotek and Kingsmen is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hydrotek Public and Kingsmen CMTI Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsmen CMTI Public and Hydrotek Public 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 Hydrotek Public are associated (or correlated) with Kingsmen CMTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsmen CMTI Public has no effect on the direction of Hydrotek Public i.e., Hydrotek Public and Kingsmen CMTI go up and down completely randomly.

Pair Corralation between Hydrotek Public and Kingsmen CMTI

Assuming the 90 days trading horizon Hydrotek Public is expected to under-perform the Kingsmen CMTI. But the stock apears to be less risky and, when comparing its historical volatility, Hydrotek Public is 14.26 times less risky than Kingsmen CMTI. The stock trades about -0.08 of its potential returns per unit of risk. The Kingsmen CMTI Public is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Kingsmen CMTI Public on September 3, 2024 and sell it today you would earn a total of  126.00  from holding Kingsmen CMTI Public or generate 9.223372036854776E16% return on investment over 90 days.

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

Hydrotek Public  vs.  Kingsmen CMTI Public

Hydrotek Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hydrotek Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Kingsmen CMTI Public

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsmen CMTI Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Kingsmen CMTI disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hydrotek Public and Kingsmen CMTI

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

The idea behind Hydrotek Public and Kingsmen CMTI Public 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.