Correlation Between Kingspan Group and COSTCO WHOLESALE

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

By analyzing existing cross correlation between Kingspan Group plc and COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on Kingspan Group and COSTCO WHOLESALE 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 Kingspan Group with a short position of COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingspan Group and COSTCO WHOLESALE.

Diversification Opportunities for Kingspan Group and COSTCO WHOLESALE

-0.83

Correlation Coefficient

Kingspan Group  COSTCO WHOLESALE

Pay attention - limited upside

The 3 months correlation between Kingspan and COSTCO is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kingspan Group plc and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR and Kingspan Group 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 Kingspan Group plc are associated (or correlated) with COSTCO WHOLESALE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSTCO WHOLESALE CDR has no effect on the direction of Kingspan Group i.e., Kingspan Group and COSTCO WHOLESALE go up and down completely randomly.

Pair Corralation between Kingspan Group and COSTCO WHOLESALE

Assuming the 90 days horizon Kingspan Group plc is expected to under-perform the COSTCO WHOLESALE. In addition to that, Kingspan Group is 1.04 times more volatile than COSTCO WHOLESALE CDR. It trades about -0.14 of its total potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about 0.06 per unit of volatility. If you would invest  2,675  in COSTCO WHOLESALE CDR on October 8, 2024 and sell it today you would earn a total of  125.00  from holding COSTCO WHOLESALE CDR or generate 4.67% return on investment over 90 days.

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

Kingspan Group plc  vs.  COSTCO WHOLESALE CDR

Kingspan Group plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingspan Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

COSTCO WHOLESALE CDR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COSTCO WHOLESALE CDR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, COSTCO WHOLESALE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kingspan Group and COSTCO WHOLESALE

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

The idea behind Kingspan Group plc and COSTCO WHOLESALE CDR 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.