Correlation Between Kingboard Chemical and LENSAR

Can any of the company-specific risk be diversified away by investing in both Kingboard Chemical and LENSAR 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 Kingboard Chemical and LENSAR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kingboard Chemical Holdings and LENSAR Inc, you can compare the effects of market volatilities on Kingboard Chemical and LENSAR 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 Kingboard Chemical with a short position of LENSAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingboard Chemical and LENSAR.

Diversification Opportunities for Kingboard Chemical and LENSAR

0.63

Correlation Coefficient

Kingboard Chemical  LENSAR

Poor diversification

The 3 months correlation between Kingboard and LENSAR is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kingboard Chemical Holdings and LENSAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENSAR Inc and Kingboard Chemical 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 Kingboard Chemical Holdings are associated (or correlated) with LENSAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENSAR Inc has no effect on the direction of Kingboard Chemical i.e., Kingboard Chemical and LENSAR go up and down completely randomly.

Pair Corralation between Kingboard Chemical and LENSAR

Assuming the 90 days horizon Kingboard Chemical is expected to generate 4.54 times less return on investment than LENSAR. But when comparing it to its historical volatility, Kingboard Chemical Holdings is 7.82 times less risky than LENSAR. It trades about 0.22 of its potential returns per unit of risk. LENSAR Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  764.00  in LENSAR Inc on October 12, 2024 and sell it today you would earn a total of  71.00  from holding LENSAR Inc or generate 9.29% return on investment over 90 days.

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

Kingboard Chemical Holdings  vs.  LENSAR Inc

Kingboard Chemical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kingboard Chemical Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Kingboard Chemical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

LENSAR Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kingboard Chemical and LENSAR

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

The idea behind Kingboard Chemical Holdings and LENSAR Inc 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.