Correlation Between King Resources and ADS TEC

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

By analyzing existing cross correlation between King Resources and ADS TEC ENERGY PLC, you can compare the effects of market volatilities on King Resources and ADS TEC 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 King Resources with a short position of ADS TEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of King Resources and ADS TEC.

Diversification Opportunities for King Resources and ADS TEC

0.48

Correlation Coefficient

King Resources  ADS TEC

Very weak diversification

The 3 months correlation between King and ADS is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding King Resources and ADS TEC ENERGY PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADS TEC ENERGY and King Resources 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 King Resources are associated (or correlated) with ADS TEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADS TEC ENERGY has no effect on the direction of King Resources i.e., King Resources and ADS TEC go up and down completely randomly.

Pair Corralation between King Resources and ADS TEC

Given the investment horizon of 90 days King Resources is expected to generate 6.32 times more return on investment than ADS TEC. However, King Resources is 6.32 times more volatile than ADS TEC ENERGY PLC. It trades about 0.11 of its potential returns per unit of risk. ADS TEC ENERGY PLC is currently generating about -0.02 per unit of risk. If you would invest  0.02  in King Resources on December 24, 2024 and sell it today you would lose (0.01) from holding King Resources or give up 50.0% of portfolio value over 90 days.

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

King Resources  vs.  ADS TEC ENERGY PLC

King Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in King Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, King Resources reported solid returns over the last few months and may actually be approaching a breakup point.

ADS TEC ENERGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days ADS TEC ENERGY PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with King Resources and ADS TEC

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

The idea behind King Resources and ADS TEC ENERGY PLC 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.