Correlation Between Irish Continental and Kingspan Group

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

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

Diversification Opportunities for Irish Continental and Kingspan Group

-0.01

Correlation Coefficient

Irish Continental  Kingspan Group

Good diversification

The 3 months correlation between Irish and Kingspan is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Irish Continental Group 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 Irish Continental 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 Irish Continental Group 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 Irish Continental i.e., Irish Continental and Kingspan Group go up and down completely randomly.

Pair Corralation between Irish Continental and Kingspan Group

Assuming the 90 days trading horizon Irish Continental Group is expected to generate 0.9 times more return on investment than Kingspan Group. However, Irish Continental Group is 1.11 times less risky than Kingspan Group. It trades about 0.03 of its potential returns per unit of risk. Kingspan Group plc is currently generating about -0.07 per unit of risk. If you would invest  540.00  in Irish Continental Group on September 3, 2024 and sell it today you would earn a total of  12.00  from holding Irish Continental Group or generate 2.22% return on investment over 90 days.

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

Irish Continental Group  vs.  Kingspan Group plc

Irish Continental

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Irish Continental Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Irish Continental is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the 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 Irish Continental and Kingspan Group

The main advantage of trading using opposite Irish Continental and Kingspan Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Irish Continental 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 Irish Continental Group 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.