Correlation Between Kingspan Group and George Weston

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

Diversification Opportunities for Kingspan Group and George Weston

0.32

Correlation Coefficient

Kingspan Group  George Weston

Weak diversification

The 3 months correlation between Kingspan and George is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Kingspan Group PLC and George Weston Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on George Weston Limited 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 George Weston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of George Weston Limited has no effect on the direction of Kingspan Group i.e., Kingspan Group and George Weston go up and down completely randomly.

Pair Corralation between Kingspan Group and George Weston

Assuming the 90 days horizon Kingspan Group PLC is expected to generate 2.44 times more return on investment than George Weston. However, Kingspan Group is 2.44 times more volatile than George Weston Limited. It trades about 0.08 of its potential returns per unit of risk. George Weston Limited is currently generating about -0.05 per unit of risk. If you would invest  7,432  in Kingspan Group PLC on December 1, 2024 and sell it today you would earn a total of  755.00  from holding Kingspan Group PLC or generate 10.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.0%
Values	Daily Returns

Kingspan Group PLC  vs.  George Weston Limited

Kingspan Group PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kingspan Group PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Kingspan Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

George Weston Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days George Weston Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, George Weston is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kingspan Group and George Weston

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

The idea behind Kingspan Group PLC and George Weston Limited 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.