Correlation Between Kingspan Group and Intact Financial

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

Diversification Opportunities for Kingspan Group and Intact Financial

0.56

Correlation Coefficient

Kingspan Group  Intact Financial

Very weak diversification

The 3 months correlation between Kingspan and Intact is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kingspan Group PLC and Intact Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial 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 Intact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intact Financial has no effect on the direction of Kingspan Group i.e., Kingspan Group and Intact Financial go up and down completely randomly.

Pair Corralation between Kingspan Group and Intact Financial

Assuming the 90 days horizon Kingspan Group PLC is expected to generate 2.03 times more return on investment than Intact Financial. However, Kingspan Group is 2.03 times more volatile than Intact Financial. It trades about 0.09 of its potential returns per unit of risk. Intact Financial is currently generating about 0.12 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Kingspan Group PLC  vs.  Intact Financial

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.

Intact Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Intact Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kingspan Group and Intact Financial

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

The idea behind Kingspan Group PLC and Intact Financial 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.