Correlation Between Kona Gold and Sipp Industries

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

By analyzing existing cross correlation between Kona Gold Solutions and Sipp Industries New, you can compare the effects of market volatilities on Kona Gold and Sipp Industries 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 Kona Gold with a short position of Sipp Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kona Gold and Sipp Industries.

Diversification Opportunities for Kona Gold and Sipp Industries

0.11

Correlation Coefficient

Kona Gold  Sipp Industries

Average diversification

The 3 months correlation between Kona and Sipp is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Kona Gold Solutions and Sipp Industries New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sipp Industries New and Kona Gold 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 Kona Gold Solutions are associated (or correlated) with Sipp Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sipp Industries New has no effect on the direction of Kona Gold i.e., Kona Gold and Sipp Industries go up and down completely randomly.

Pair Corralation between Kona Gold and Sipp Industries

Given the investment horizon of 90 days Kona Gold Solutions is expected to generate 1.97 times more return on investment than Sipp Industries. However, Kona Gold is 1.97 times more volatile than Sipp Industries New. It trades about 0.14 of its potential returns per unit of risk. Sipp Industries New is currently generating about 0.14 per unit of risk. If you would invest  0.02  in Kona Gold Solutions on December 27, 2024 and sell it today you would lose (0.01) from holding Kona Gold Solutions or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Kona Gold Solutions  vs.  Sipp Industries New

Kona Gold Solutions

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kona Gold Solutions are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly sluggish forward-looking signals, Kona Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Sipp Industries New

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sipp Industries New are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Sipp Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kona Gold and Sipp Industries

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

The idea behind Kona Gold Solutions and Sipp Industries New 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.