Correlation Between Kap Industrial and Coronation Smaller

Can any of the company-specific risk be diversified away by investing in both Kap Industrial and Coronation Smaller 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 Kap Industrial and Coronation Smaller into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kap Industrial Holdings and Coronation Smaller Companies, you can compare the effects of market volatilities on Kap Industrial and Coronation Smaller 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 Kap Industrial with a short position of Coronation Smaller. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kap Industrial and Coronation Smaller.

Diversification Opportunities for Kap Industrial and Coronation Smaller

-0.05

Correlation Coefficient

Kap Industrial  Coronation Smaller

Good diversification

The 3 months correlation between Kap and Coronation is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and Coronation Smaller Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Smaller and Kap Industrial 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 Kap Industrial Holdings are associated (or correlated) with Coronation Smaller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Smaller has no effect on the direction of Kap Industrial i.e., Kap Industrial and Coronation Smaller go up and down completely randomly.

Pair Corralation between Kap Industrial and Coronation Smaller

Assuming the 90 days trading horizon Kap Industrial Holdings is expected to under-perform the Coronation Smaller. In addition to that, Kap Industrial is 3.85 times more volatile than Coronation Smaller Companies. It trades about -0.11 of its total potential returns per unit of risk. Coronation Smaller Companies is currently generating about 0.02 per unit of volatility. If you would invest  13,472  in Coronation Smaller Companies on October 21, 2024 and sell it today you would earn a total of  82.00  from holding Coronation Smaller Companies or generate 0.61% return on investment over 90 days.

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

Kap Industrial Holdings  vs.  Coronation Smaller Companies

Kap Industrial Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kap Industrial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Coronation Smaller

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Smaller Companies are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Coronation Smaller is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Kap Industrial and Coronation Smaller

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

The idea behind Kap Industrial Holdings and Coronation Smaller Companies 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.