Correlation Between Kri Kri and Motor Oil

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

By analyzing existing cross correlation between Kri Kri Milk Industry and Motor Oil Corinth, you can compare the effects of market volatilities on Kri Kri and Motor Oil 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 Kri Kri with a short position of Motor Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kri Kri and Motor Oil.

Diversification Opportunities for Kri Kri and Motor Oil

-0.11

Correlation Coefficient

Kri Kri  Motor Oil

Good diversification

The 3 months correlation between Kri and Motor is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Kri Kri Milk Industry and Motor Oil Corinth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motor Oil Corinth and Kri Kri 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 Kri Kri Milk Industry are associated (or correlated) with Motor Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motor Oil Corinth has no effect on the direction of Kri Kri i.e., Kri Kri and Motor Oil go up and down completely randomly.

Pair Corralation between Kri Kri and Motor Oil

Assuming the 90 days trading horizon Kri Kri Milk Industry is expected to generate 0.88 times more return on investment than Motor Oil. However, Kri Kri Milk Industry is 1.13 times less risky than Motor Oil. It trades about 0.12 of its potential returns per unit of risk. Motor Oil Corinth is currently generating about 0.02 per unit of risk. If you would invest  658.00  in Kri Kri Milk Industry on October 10, 2024 and sell it today you would earn a total of  912.00  from holding Kri Kri Milk Industry or generate 138.6% return on investment over 90 days.

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

Kri Kri Milk Industry  vs.  Motor Oil Corinth

Kri Kri Milk

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kri Kri Milk Industry are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Kri Kri unveiled solid returns over the last few months and may actually be approaching a breakup point.

Motor Oil Corinth

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Motor Oil Corinth are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Motor Oil is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kri Kri and Motor Oil

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

The idea behind Kri Kri Milk Industry and Motor Oil Corinth 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.