Correlation Between KINGBOARD CHEMICAL and TTM Technologies

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

By analyzing existing cross correlation between KINGBOARD CHEMICAL and TTM Technologies, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and TTM Technologies 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 KINGBOARD CHEMICAL with a short position of TTM Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and TTM Technologies.

Diversification Opportunities for KINGBOARD CHEMICAL and TTM Technologies

0.39

Correlation Coefficient

KINGBOARD CHEMICAL  TTM Technologies

Weak diversification

The 3 months correlation between KINGBOARD and TTM is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and TTM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTM Technologies and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL are associated (or correlated) with TTM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTM Technologies has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and TTM Technologies go up and down completely randomly.

Pair Corralation between KINGBOARD CHEMICAL and TTM Technologies

Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 2.68 times more return on investment than TTM Technologies. However, KINGBOARD CHEMICAL is 2.68 times more volatile than TTM Technologies. It trades about 0.19 of its potential returns per unit of risk. TTM Technologies is currently generating about 0.11 per unit of risk. If you would invest  195.00  in KINGBOARD CHEMICAL on October 8, 2024 and sell it today you would earn a total of  31.00  from holding KINGBOARD CHEMICAL or generate 15.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

KINGBOARD CHEMICAL  vs.  TTM Technologies

KINGBOARD CHEMICAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KINGBOARD CHEMICAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, KINGBOARD CHEMICAL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

TTM Technologies

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TTM Technologies are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TTM Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KINGBOARD CHEMICAL and TTM Technologies

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

The idea behind KINGBOARD CHEMICAL and TTM Technologies 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.