Correlation Between Kingsmen CMTI and KC Metalsheet

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

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

Diversification Opportunities for Kingsmen CMTI and KC Metalsheet

-0.58

Correlation Coefficient

Kingsmen CMTI  KC Metalsheet

Excellent diversification

The 3 months correlation between Kingsmen and KCM is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kingsmen CMTI Public and KC Metalsheet Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KC Metalsheet Public and Kingsmen CMTI 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 Kingsmen CMTI Public are associated (or correlated) with KC Metalsheet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KC Metalsheet Public has no effect on the direction of Kingsmen CMTI i.e., Kingsmen CMTI and KC Metalsheet go up and down completely randomly.

Pair Corralation between Kingsmen CMTI and KC Metalsheet

Given the investment horizon of 90 days Kingsmen CMTI Public is expected to generate 0.47 times more return on investment than KC Metalsheet. However, Kingsmen CMTI Public is 2.15 times less risky than KC Metalsheet. It trades about 0.14 of its potential returns per unit of risk. KC Metalsheet Public is currently generating about -0.09 per unit of risk. If you would invest  121.00  in Kingsmen CMTI Public on December 29, 2024 and sell it today you would earn a total of  24.00  from holding Kingsmen CMTI Public or generate 19.83% return on investment over 90 days.

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

Kingsmen CMTI Public  vs.  KC Metalsheet Public

Kingsmen CMTI Public

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsmen CMTI Public are ranked lower than 11 (%) 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.

KC Metalsheet Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days KC Metalsheet 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 primary indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Kingsmen CMTI and KC Metalsheet

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

The idea behind Kingsmen CMTI Public and KC Metalsheet 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.