Correlation Between Kap Industrial and Pick N

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

Diversification Opportunities for Kap Industrial and Pick N

-0.61

Correlation Coefficient

Kap Industrial  Pick N

Excellent diversification

The 3 months correlation between Kap and Pick is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and Pick N Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pick N Pay 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 Pick N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pick N Pay has no effect on the direction of Kap Industrial i.e., Kap Industrial and Pick N go up and down completely randomly.

Pair Corralation between Kap Industrial and Pick N

Assuming the 90 days trading horizon Kap Industrial Holdings is expected to under-perform the Pick N. In addition to that, Kap Industrial is 1.12 times more volatile than Pick N Pay. It trades about -0.14 of its total potential returns per unit of risk. Pick N Pay is currently generating about 0.13 per unit of volatility. If you would invest  280,500  in Pick N Pay on October 10, 2024 and sell it today you would earn a total of  38,100  from holding Pick N Pay or generate 13.58% 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.  Pick N Pay

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.

Pick N Pay

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pick N Pay are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Pick N exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kap Industrial and Pick N

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

The idea behind Kap Industrial Holdings and Pick N Pay 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..