Correlation Between KC Metalsheet and Kingsmen CMTI

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

By analyzing existing cross correlation between KC Metalsheet Public and Kingsmen CMTI Public, you can compare the effects of market volatilities on KC Metalsheet and Kingsmen CMTI 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 KC Metalsheet with a short position of Kingsmen CMTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of KC Metalsheet and Kingsmen CMTI.

Diversification Opportunities for KC Metalsheet and Kingsmen CMTI

-0.58

Correlation Coefficient

KC Metalsheet  Kingsmen CMTI

Excellent diversification

The 3 months correlation between KCM and Kingsmen is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding KC Metalsheet Public and Kingsmen CMTI Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsmen CMTI Public and KC Metalsheet 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 KC Metalsheet Public are associated (or correlated) with Kingsmen CMTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsmen CMTI Public has no effect on the direction of KC Metalsheet i.e., KC Metalsheet and Kingsmen CMTI go up and down completely randomly.

Pair Corralation between KC Metalsheet and Kingsmen CMTI

Assuming the 90 days trading horizon KC Metalsheet Public is expected to under-perform the Kingsmen CMTI. In addition to that, KC Metalsheet is 2.15 times more volatile than Kingsmen CMTI Public. It trades about -0.09 of its total potential returns per unit of risk. Kingsmen CMTI Public is currently generating about 0.14 per unit of volatility. If you would invest  121.00  in Kingsmen CMTI Public on December 29, 2024 and sell it today you would earn a total of  24.00  from holding Kingsmen CMTI Public or generate 19.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

KC Metalsheet Public  vs.  Kingsmen CMTI Public

KC Metalsheet Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days KC Metalsheet Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Kingsmen CMTI Public

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsmen CMTI Public are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Kingsmen CMTI disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KC Metalsheet and Kingsmen CMTI

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

The idea behind KC Metalsheet Public and Kingsmen CMTI Public 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.