Correlation Between Kontoor Brands and Ironveld Plc

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

By analyzing existing cross correlation between Kontoor Brands and Ironveld Plc, you can compare the effects of market volatilities on Kontoor Brands and Ironveld Plc 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 Kontoor Brands with a short position of Ironveld Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kontoor Brands and Ironveld Plc.

Diversification Opportunities for Kontoor Brands and Ironveld Plc

0.0

Correlation Coefficient

Kontoor Brands  Ironveld Plc

Pay attention - limited upside

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

Pair Corralation between Kontoor Brands and Ironveld Plc

Considering the 90-day investment horizon Kontoor Brands is expected to generate 2.04 times less return on investment than Ironveld Plc. But when comparing it to its historical volatility, Kontoor Brands is 1.85 times less risky than Ironveld Plc. It trades about 0.08 of its potential returns per unit of risk. Ironveld Plc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Ironveld Plc on September 26, 2024 and sell it today you would earn a total of  0.01  from holding Ironveld Plc or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	26.81%
Values	Daily Returns

Kontoor Brands  vs.  Ironveld Plc

Kontoor Brands

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kontoor Brands are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Kontoor Brands may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ironveld Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ironveld Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Ironveld Plc is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kontoor Brands and Ironveld Plc

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

The idea behind Kontoor Brands and Ironveld 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .