Correlation Between Kap Industrial and Telemasters Holdings

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

Diversification Opportunities for Kap Industrial and Telemasters Holdings

-0.13

Correlation Coefficient

Kap Industrial  Telemasters Holdings

Good diversification

The 3 months correlation between Kap and Telemasters is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and Telemasters Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telemasters Holdings 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 Telemasters Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telemasters Holdings has no effect on the direction of Kap Industrial i.e., Kap Industrial and Telemasters Holdings go up and down completely randomly.

Pair Corralation between Kap Industrial and Telemasters Holdings

Assuming the 90 days trading horizon Kap Industrial Holdings is expected to generate 4.57 times more return on investment than Telemasters Holdings. However, Kap Industrial is 4.57 times more volatile than Telemasters Holdings. It trades about 0.05 of its potential returns per unit of risk. Telemasters Holdings is currently generating about 0.0 per unit of risk. If you would invest  31,000  in Kap Industrial Holdings on September 16, 2024 and sell it today you would earn a total of  500.00  from holding Kap Industrial Holdings or generate 1.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Kap Industrial Holdings  vs.  Telemasters Holdings

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 rather sound technical and fundamental indicators, Kap Industrial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Telemasters Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telemasters Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Telemasters Holdings 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 Telemasters Holdings

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

The idea behind Kap Industrial Holdings and Telemasters Holdings 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.