Correlation Between Kingspan Group and Carrier Global

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

By analyzing existing cross correlation between Kingspan Group PLC and Carrier Global Corp, you can compare the effects of market volatilities on Kingspan Group and Carrier Global 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 Kingspan Group with a short position of Carrier Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingspan Group and Carrier Global.

Diversification Opportunities for Kingspan Group and Carrier Global

-0.13

Correlation Coefficient

Kingspan Group  Carrier Global

Good diversification

The 3 months correlation between Kingspan and Carrier is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kingspan Group PLC and Carrier Global Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrier Global Corp and Kingspan Group 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 Kingspan Group PLC are associated (or correlated) with Carrier Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrier Global Corp has no effect on the direction of Kingspan Group i.e., Kingspan Group and Carrier Global go up and down completely randomly.

Pair Corralation between Kingspan Group and Carrier Global

Assuming the 90 days horizon Kingspan Group PLC is expected to generate 1.49 times more return on investment than Carrier Global. However, Kingspan Group is 1.49 times more volatile than Carrier Global Corp. It trades about 0.09 of its potential returns per unit of risk. Carrier Global Corp is currently generating about -0.06 per unit of risk. If you would invest  7,275  in Kingspan Group PLC on December 30, 2024 and sell it today you would earn a total of  1,021  from holding Kingspan Group PLC or generate 14.03% return on investment over 90 days.

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

Kingspan Group PLC  vs.  Carrier Global Corp

Kingspan Group PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kingspan Group PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Kingspan Group showed solid returns over the last few months and may actually be approaching a breakup point.

Carrier Global Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carrier Global Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Kingspan Group and Carrier Global

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

The idea behind Kingspan Group PLC and Carrier Global Corp 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.