Correlation Between Kap Industrial and Alexander Forbes

Can any of the company-specific risk be diversified away by investing in both Kap Industrial and Alexander Forbes 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 Alexander Forbes 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 Alexander Forbes Grp, you can compare the effects of market volatilities on Kap Industrial and Alexander Forbes 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 Alexander Forbes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kap Industrial and Alexander Forbes.

Diversification Opportunities for Kap Industrial and Alexander Forbes

-0.81

Correlation Coefficient

Kap Industrial  Alexander Forbes

Pay attention - limited upside

The 3 months correlation between Kap and Alexander is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and Alexander Forbes Grp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexander Forbes Grp 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 Alexander Forbes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexander Forbes Grp has no effect on the direction of Kap Industrial i.e., Kap Industrial and Alexander Forbes go up and down completely randomly.

Pair Corralation between Kap Industrial and Alexander Forbes

Assuming the 90 days trading horizon Kap Industrial Holdings is expected to generate 1.29 times more return on investment than Alexander Forbes. However, Kap Industrial is 1.29 times more volatile than Alexander Forbes Grp. It trades about -0.08 of its potential returns per unit of risk. Alexander Forbes Grp is currently generating about -0.16 per unit of risk. If you would invest  30,100  in Kap Industrial Holdings on October 23, 2024 and sell it today you would lose (1,200) from holding Kap Industrial Holdings or give up 3.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Kap Industrial Holdings  vs.  Alexander Forbes Grp

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 latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Alexander Forbes Grp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alexander Forbes Grp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Alexander Forbes may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kap Industrial and Alexander Forbes

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

The idea behind Kap Industrial Holdings and Alexander Forbes Grp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.