Correlation Between Kap Industrial and Astoria Investments

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

Diversification Opportunities for Kap Industrial and Astoria Investments

0.02

Correlation Coefficient

Kap Industrial  Astoria Investments

Significant diversification

The 3 months correlation between Kap and Astoria is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and Astoria Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astoria Investments 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 Astoria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astoria Investments has no effect on the direction of Kap Industrial i.e., Kap Industrial and Astoria Investments go up and down completely randomly.

Pair Corralation between Kap Industrial and Astoria Investments

Assuming the 90 days trading horizon Kap Industrial Holdings is expected to under-perform the Astoria Investments. In addition to that, Kap Industrial is 1.69 times more volatile than Astoria Investments. It trades about -0.05 of its total potential returns per unit of risk. Astoria Investments is currently generating about -0.05 per unit of volatility. If you would invest  85,000  in Astoria Investments on December 29, 2024 and sell it today you would lose (5,000) from holding Astoria Investments or give up 5.88% of portfolio value over 90 days.

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

Kap Industrial Holdings  vs.  Astoria Investments

Kap Industrial Holdings

Risk-Adjusted Performance

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.

Astoria Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astoria Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Astoria Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kap Industrial and Astoria Investments

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

The idea behind Kap Industrial Holdings and Astoria Investments 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.