Correlation Between Kuehne + and GXO Logistics

Can any of the company-specific risk be diversified away by investing in both Kuehne + and GXO Logistics 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 Kuehne + and GXO Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kuehne Nagel International and GXO Logistics, you can compare the effects of market volatilities on Kuehne + and GXO Logistics 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 Kuehne + with a short position of GXO Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kuehne + and GXO Logistics.

Diversification Opportunities for Kuehne + and GXO Logistics

-0.53

Correlation Coefficient

Kuehne +  GXO Logistics

Excellent diversification

The 3 months correlation between Kuehne and GXO is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kuehne Nagel International and GXO Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GXO Logistics and Kuehne + 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 Kuehne Nagel International are associated (or correlated) with GXO Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GXO Logistics has no effect on the direction of Kuehne + i.e., Kuehne + and GXO Logistics go up and down completely randomly.

Pair Corralation between Kuehne + and GXO Logistics

Assuming the 90 days horizon Kuehne Nagel International is expected to generate 0.61 times more return on investment than GXO Logistics. However, Kuehne Nagel International is 1.63 times less risky than GXO Logistics. It trades about 0.06 of its potential returns per unit of risk. GXO Logistics is currently generating about -0.02 per unit of risk. If you would invest  22,949  in Kuehne Nagel International on December 27, 2024 and sell it today you would earn a total of  1,176  from holding Kuehne Nagel International or generate 5.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Kuehne Nagel International  vs.  GXO Logistics

Kuehne Nagel Interna

Risk-Adjusted Performance

Insignificant

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

GXO Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days GXO Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, GXO Logistics is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Kuehne + and GXO Logistics

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

The idea behind Kuehne Nagel International and GXO Logistics 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.