Correlation Between Kingstone Companies and ProAssurance

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

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

Diversification Opportunities for Kingstone Companies and ProAssurance

0.72

Correlation Coefficient

Kingstone Companies  ProAssurance

Poor diversification

The 3 months correlation between Kingstone and ProAssurance is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kingstone Companies and ProAssurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProAssurance and Kingstone Companies 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 Kingstone Companies are associated (or correlated) with ProAssurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProAssurance has no effect on the direction of Kingstone Companies i.e., Kingstone Companies and ProAssurance go up and down completely randomly.

Pair Corralation between Kingstone Companies and ProAssurance

Given the investment horizon of 90 days Kingstone Companies is expected to generate 1.81 times more return on investment than ProAssurance. However, Kingstone Companies is 1.81 times more volatile than ProAssurance. It trades about 0.26 of its potential returns per unit of risk. ProAssurance is currently generating about 0.17 per unit of risk. If you would invest  872.00  in Kingstone Companies on August 30, 2024 and sell it today you would earn a total of  723.00  from holding Kingstone Companies or generate 82.91% return on investment over 90 days.

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

Kingstone Companies  vs.  ProAssurance

Kingstone Companies

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kingstone Companies are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Kingstone Companies unveiled solid returns over the last few months and may actually be approaching a breakup point.

ProAssurance

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProAssurance are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ProAssurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kingstone Companies and ProAssurance

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

The idea behind Kingstone Companies and ProAssurance 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.