Correlation Between KC Metalsheet and Rojana Industrial

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

Diversification Opportunities for KC Metalsheet and Rojana Industrial

0.8

Correlation Coefficient

KC Metalsheet  Rojana Industrial

Very poor diversification

The 3 months correlation between KCM and Rojana is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding KC Metalsheet Public and Rojana Industrial Park in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rojana Industrial Park 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 Rojana Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rojana Industrial Park has no effect on the direction of KC Metalsheet i.e., KC Metalsheet and Rojana Industrial go up and down completely randomly.

Pair Corralation between KC Metalsheet and Rojana Industrial

Assuming the 90 days trading horizon KC Metalsheet Public is expected to under-perform the Rojana Industrial. In addition to that, KC Metalsheet is 1.43 times more volatile than Rojana Industrial Park. It trades about -0.16 of its total potential returns per unit of risk. Rojana Industrial Park is currently generating about -0.13 per unit of volatility. If you would invest  705.00  in Rojana Industrial Park on October 11, 2024 and sell it today you would lose (115.00) from holding Rojana Industrial Park or give up 16.31% of portfolio value over 90 days.

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

KC Metalsheet Public  vs.  Rojana Industrial Park

KC Metalsheet Public

Risk-Adjusted Performance

0 of 100

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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Rojana Industrial Park

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rojana Industrial Park 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 fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with KC Metalsheet and Rojana Industrial

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

The idea behind KC Metalsheet Public and Rojana Industrial Park 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.