Correlation Between Keg Royalties and Rogers Sugar

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

By analyzing existing cross correlation between The Keg Royalties and Rogers Sugar, you can compare the effects of market volatilities on Keg Royalties and Rogers Sugar 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 Keg Royalties with a short position of Rogers Sugar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keg Royalties and Rogers Sugar.

Diversification Opportunities for Keg Royalties and Rogers Sugar

0.76

Correlation Coefficient

Keg Royalties  Rogers Sugar

Poor diversification

The 3 months correlation between Keg and Rogers is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Keg Royalties and Rogers Sugar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers Sugar and Keg Royalties 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 The Keg Royalties are associated (or correlated) with Rogers Sugar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Sugar has no effect on the direction of Keg Royalties i.e., Keg Royalties and Rogers Sugar go up and down completely randomly.

Pair Corralation between Keg Royalties and Rogers Sugar

Assuming the 90 days trading horizon The Keg Royalties is expected to under-perform the Rogers Sugar. In addition to that, Keg Royalties is 1.02 times more volatile than Rogers Sugar. It trades about -0.1 of its total potential returns per unit of risk. Rogers Sugar is currently generating about -0.09 per unit of volatility. If you would invest  577.00  in Rogers Sugar on December 30, 2024 and sell it today you would lose (37.00) from holding Rogers Sugar or give up 6.41% of portfolio value over 90 days.

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

The Keg Royalties  vs.  Rogers Sugar

Keg Royalties

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Keg Royalties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Rogers Sugar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rogers Sugar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Rogers Sugar is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Keg Royalties and Rogers Sugar

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

The idea behind The Keg Royalties and Rogers Sugar 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.