Correlation Between Kore Potash and Blue Label

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

By analyzing existing cross correlation between Kore Potash Plc and Blue Label Telecoms, you can compare the effects of market volatilities on Kore Potash and Blue Label 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 Kore Potash with a short position of Blue Label. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kore Potash and Blue Label.

Diversification Opportunities for Kore Potash and Blue Label

0.22

Correlation Coefficient

Kore Potash  Blue Label

Modest diversification

The 3 months correlation between Kore and Blue is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Kore Potash Plc and Blue Label Telecoms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Label Telecoms and Kore Potash 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 Kore Potash Plc are associated (or correlated) with Blue Label. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Label Telecoms has no effect on the direction of Kore Potash i.e., Kore Potash and Blue Label go up and down completely randomly.

Pair Corralation between Kore Potash and Blue Label

Assuming the 90 days trading horizon Kore Potash is expected to generate 1.85 times less return on investment than Blue Label. In addition to that, Kore Potash is 3.25 times more volatile than Blue Label Telecoms. It trades about 0.03 of its total potential returns per unit of risk. Blue Label Telecoms is currently generating about 0.19 per unit of volatility. If you would invest  48,200  in Blue Label Telecoms on September 15, 2024 and sell it today you would earn a total of  10,100  from holding Blue Label Telecoms or generate 20.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Kore Potash Plc  vs.  Blue Label Telecoms

Kore Potash Plc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kore Potash Plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Kore Potash may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Blue Label Telecoms

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Label Telecoms are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Blue Label exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kore Potash and Blue Label

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

The idea behind Kore Potash Plc and Blue Label Telecoms 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.