Correlation Between Kap Industrial and NewWave GBP

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

Diversification Opportunities for Kap Industrial and NewWave GBP

-0.67

Correlation Coefficient

Kap Industrial  NewWave GBP

Excellent diversification

The 3 months correlation between Kap and NewWave is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and NewWave GBP Currency in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewWave GBP Currency 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 NewWave GBP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewWave GBP Currency has no effect on the direction of Kap Industrial i.e., Kap Industrial and NewWave GBP go up and down completely randomly.

Pair Corralation between Kap Industrial and NewWave GBP

Assuming the 90 days trading horizon Kap Industrial Holdings is expected to under-perform the NewWave GBP. In addition to that, Kap Industrial is 3.21 times more volatile than NewWave GBP Currency. It trades about -0.14 of its total potential returns per unit of risk. NewWave GBP Currency is currently generating about 0.09 per unit of volatility. If you would invest  228,900  in NewWave GBP Currency on October 7, 2024 and sell it today you would earn a total of  7,100  from holding NewWave GBP Currency or generate 3.1% return on investment over 90 days.

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

Kap Industrial Holdings  vs.  NewWave GBP Currency

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.

NewWave GBP Currency

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NewWave GBP Currency are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, NewWave GBP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kap Industrial and NewWave GBP

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

The idea behind Kap Industrial Holdings and NewWave GBP Currency 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..