Correlation Between Kelly Services and Futuris

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

By analyzing existing cross correlation between Kelly Services A and Futuris Company, you can compare the effects of market volatilities on Kelly Services and Futuris 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 Kelly Services with a short position of Futuris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kelly Services and Futuris.

Diversification Opportunities for Kelly Services and Futuris

0.35

Correlation Coefficient

Kelly Services  Futuris

Weak diversification

The 3 months correlation between Kelly and Futuris is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Kelly Services A and Futuris Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futuris Company and Kelly Services 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 Kelly Services A are associated (or correlated) with Futuris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futuris Company has no effect on the direction of Kelly Services i.e., Kelly Services and Futuris go up and down completely randomly.

Pair Corralation between Kelly Services and Futuris

Assuming the 90 days horizon Kelly Services is expected to generate 17.52 times less return on investment than Futuris. But when comparing it to its historical volatility, Kelly Services A is 3.93 times less risky than Futuris. It trades about 0.01 of its potential returns per unit of risk. Futuris Company is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1.79  in Futuris Company on December 29, 2024 and sell it today you would earn a total of  0.11  from holding Futuris Company or generate 6.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Kelly Services A  vs.  Futuris Company

Kelly Services A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kelly Services A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kelly Services is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Futuris Company

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Futuris Company are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Futuris unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kelly Services and Futuris

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

The idea behind Kelly Services A and Futuris Company 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.