Correlation Between Kingspan Group and TRAVIS PERKINS

Can any of the company-specific risk be diversified away by investing in both Kingspan Group and TRAVIS PERKINS 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 TRAVIS PERKINS 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 TRAVIS PERKINS LS 1, you can compare the effects of market volatilities on Kingspan Group and TRAVIS PERKINS 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 TRAVIS PERKINS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingspan Group and TRAVIS PERKINS.

Diversification Opportunities for Kingspan Group and TRAVIS PERKINS

-0.77

Correlation Coefficient

Kingspan Group  TRAVIS PERKINS

Pay attention - limited upside

The 3 months correlation between Kingspan and TRAVIS is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Kingspan Group plc and TRAVIS PERKINS LS 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVIS PERKINS LS 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 TRAVIS PERKINS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVIS PERKINS LS has no effect on the direction of Kingspan Group i.e., Kingspan Group and TRAVIS PERKINS go up and down completely randomly.

Pair Corralation between Kingspan Group and TRAVIS PERKINS

Assuming the 90 days horizon Kingspan Group plc is expected to generate 1.35 times more return on investment than TRAVIS PERKINS. However, Kingspan Group is 1.35 times more volatile than TRAVIS PERKINS LS 1. It trades about 0.09 of its potential returns per unit of risk. TRAVIS PERKINS LS 1 is currently generating about -0.15 per unit of risk. If you would invest  6,885  in Kingspan Group plc on December 29, 2024 and sell it today you would earn a total of  965.00  from holding Kingspan Group plc or generate 14.02% return on investment over 90 days.

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

Kingspan Group plc  vs.  TRAVIS PERKINS LS 1

Kingspan Group plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kingspan Group plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kingspan Group reported solid returns over the last few months and may actually be approaching a breakup point.

TRAVIS PERKINS LS

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRAVIS PERKINS LS 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Kingspan Group and TRAVIS PERKINS

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

The idea behind Kingspan Group plc and TRAVIS PERKINS LS 1 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.