Correlation Between KS AG and American Vanguard

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

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

Diversification Opportunities for KS AG and American Vanguard

-0.51

Correlation Coefficient

KS AG  American Vanguard

Excellent diversification

The 3 months correlation between KPLUY and American is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding KS AG DRC and American Vanguard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Vanguard and KS AG 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 KS AG DRC are associated (or correlated) with American Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Vanguard has no effect on the direction of KS AG i.e., KS AG and American Vanguard go up and down completely randomly.

Pair Corralation between KS AG and American Vanguard

Assuming the 90 days horizon KS AG DRC is expected to generate 1.16 times more return on investment than American Vanguard. However, KS AG is 1.16 times more volatile than American Vanguard. It trades about 0.0 of its potential returns per unit of risk. American Vanguard is currently generating about -0.06 per unit of risk. If you would invest  887.00  in KS AG DRC on September 1, 2024 and sell it today you would lose (296.00) from holding KS AG DRC or give up 33.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.18%
Values	Daily Returns

KS AG DRC  vs.  American Vanguard

KS AG DRC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KS AG DRC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, KS AG may actually be approaching a critical reversion point that can send shares even higher in December 2024.

American Vanguard

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Vanguard are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, American Vanguard is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with KS AG and American Vanguard

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

The idea behind KS AG DRC and American Vanguard 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.