Correlation Between Kap Industrial and Sabvest Capital

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

Diversification Opportunities for Kap Industrial and Sabvest Capital

-0.69

Correlation Coefficient

Kap Industrial  Sabvest Capital

Excellent diversification

The 3 months correlation between Kap and Sabvest is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and Sabvest Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabvest Capital 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 Sabvest Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabvest Capital has no effect on the direction of Kap Industrial i.e., Kap Industrial and Sabvest Capital go up and down completely randomly.

Pair Corralation between Kap Industrial and Sabvest Capital

Assuming the 90 days trading horizon Kap Industrial Holdings is expected to under-perform the Sabvest Capital. In addition to that, Kap Industrial is 1.45 times more volatile than Sabvest Capital. It trades about -0.05 of its total potential returns per unit of risk. Sabvest Capital is currently generating about 0.22 per unit of volatility. If you would invest  912,400  in Sabvest Capital on October 22, 2024 and sell it today you would earn a total of  57,600  from holding Sabvest Capital or generate 6.31% 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.  Sabvest Capital

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 uncertain 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.

Sabvest Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sabvest Capital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sabvest Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kap Industrial and Sabvest Capital

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

The idea behind Kap Industrial Holdings and Sabvest Capital 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.