Correlation Between Kingboard Chemical and IAGLN

Can any of the company-specific risk be diversified away by investing in both Kingboard Chemical and IAGLN 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 IAGLN 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 IAGLN 425 15 NOV 32, you can compare the effects of market volatilities on Kingboard Chemical and IAGLN 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 IAGLN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingboard Chemical and IAGLN.

Diversification Opportunities for Kingboard Chemical and IAGLN

0.19

Correlation Coefficient

Kingboard Chemical  IAGLN

Average diversification

The 3 months correlation between Kingboard and IAGLN is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Kingboard Chemical Holdings and IAGLN 425 15 NOV 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAGLN 425 15 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 IAGLN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAGLN 425 15 has no effect on the direction of Kingboard Chemical i.e., Kingboard Chemical and IAGLN go up and down completely randomly.

Pair Corralation between Kingboard Chemical and IAGLN

Assuming the 90 days horizon Kingboard Chemical Holdings is expected to under-perform the IAGLN. In addition to that, Kingboard Chemical is 1.21 times more volatile than IAGLN 425 15 NOV 32. It trades about -0.02 of its total potential returns per unit of risk. IAGLN 425 15 NOV 32 is currently generating about 0.0 per unit of volatility. If you would invest  9,319  in IAGLN 425 15 NOV 32 on October 26, 2024 and sell it today you would lose (19.00) from holding IAGLN 425 15 NOV 32 or give up 0.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	27.13%
Values	Daily Returns

Kingboard Chemical Holdings  vs.  IAGLN 425 15 NOV 32

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 current stock price disturbance, may contribute to short-term losses for the investors.

IAGLN 425 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IAGLN 425 15 NOV 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for IAGLN 425 15 NOV 32 investors.

Pair Trading with Kingboard Chemical and IAGLN

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

The idea behind Kingboard Chemical Holdings and IAGLN 425 15 NOV 32 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.