Correlation Between Kurita Water and Zurn Elkay

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

By analyzing existing cross correlation between Kurita Water Industries and Zurn Elkay Water, you can compare the effects of market volatilities on Kurita Water and Zurn Elkay 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 Kurita Water with a short position of Zurn Elkay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kurita Water and Zurn Elkay.

Diversification Opportunities for Kurita Water and Zurn Elkay

-0.27

Correlation Coefficient

Kurita Water  Zurn Elkay

Very good diversification

The 3 months correlation between Kurita and Zurn is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Kurita Water Industries and Zurn Elkay Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurn Elkay Water and Kurita Water 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 Kurita Water Industries are associated (or correlated) with Zurn Elkay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurn Elkay Water has no effect on the direction of Kurita Water i.e., Kurita Water and Zurn Elkay go up and down completely randomly.

Pair Corralation between Kurita Water and Zurn Elkay

Assuming the 90 days horizon Kurita Water is expected to generate 11.26 times less return on investment than Zurn Elkay. In addition to that, Kurita Water is 1.67 times more volatile than Zurn Elkay Water. It trades about 0.0 of its total potential returns per unit of risk. Zurn Elkay Water is currently generating about 0.07 per unit of volatility. If you would invest  2,164  in Zurn Elkay Water on October 8, 2024 and sell it today you would earn a total of  1,561  from holding Zurn Elkay Water or generate 72.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	69.82%
Values	Daily Returns

Kurita Water Industries  vs.  Zurn Elkay Water

Kurita Water Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kurita Water Industries 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 forward 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.

Zurn Elkay Water

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zurn Elkay Water are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Zurn Elkay is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kurita Water and Zurn Elkay

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

The idea behind Kurita Water Industries and Zurn Elkay Water 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.