Correlation Between Kingspan Group and Great Western

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

Diversification Opportunities for Kingspan Group and Great Western

0.0

Correlation Coefficient

Kingspan Group  Great Western

Pay attention - limited upside

The 3 months correlation between Kingspan and Great is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kingspan Group plc and Great Western Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Western Mining 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 Great Western. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Western Mining has no effect on the direction of Kingspan Group i.e., Kingspan Group and Great Western go up and down completely randomly.

Pair Corralation between Kingspan Group and Great Western

If you would invest  6,995  in Kingspan Group plc on December 30, 2024 and sell it today you would earn a total of  670.00  from holding Kingspan Group plc or generate 9.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Kingspan Group plc  vs.  Great Western Mining

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 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Kingspan Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Great Western Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Great Western Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Great Western is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Kingspan Group and Great Western

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

The idea behind Kingspan Group plc and Great Western Mining 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.