Correlation Between Kimberly Clark and Lavvi Empreendimentos

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

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

Diversification Opportunities for Kimberly Clark and Lavvi Empreendimentos

0.39

Correlation Coefficient

Kimberly Clark  Lavvi Empreendimentos

Weak diversification

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

Pair Corralation between Kimberly Clark and Lavvi Empreendimentos

Assuming the 90 days trading horizon Kimberly Clark is expected to under-perform the Lavvi Empreendimentos. But the stock apears to be less risky and, when comparing its historical volatility, Kimberly Clark is 1.2 times less risky than Lavvi Empreendimentos. The stock trades about -0.02 of its potential returns per unit of risk. The Lavvi Empreendimentos Imobilirios is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  719.00  in Lavvi Empreendimentos Imobilirios on December 24, 2024 and sell it today you would earn a total of  249.00  from holding Lavvi Empreendimentos Imobilirios or generate 34.63% return on investment over 90 days.

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

Kimberly Clark  vs.  Lavvi Empreendimentos Imobilir

Kimberly Clark

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kimberly Clark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Kimberly Clark is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lavvi Empreendimentos

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lavvi Empreendimentos Imobilirios are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lavvi Empreendimentos unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kimberly Clark and Lavvi Empreendimentos

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

The idea behind Kimberly Clark and Lavvi Empreendimentos Imobilirios 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.