Correlation Between K W and Masterkool International

Can any of the company-specific risk be diversified away by investing in both K W and Masterkool International 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 K W and Masterkool International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between K W Metal and Masterkool International Public, you can compare the effects of market volatilities on K W and Masterkool International 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 K W with a short position of Masterkool International. Check out your portfolio center. Please also check ongoing floating volatility patterns of K W and Masterkool International.

Diversification Opportunities for K W and Masterkool International

0.77

Correlation Coefficient

K W  Masterkool International

Poor diversification

The 3 months correlation between KWM and Masterkool is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding K W Metal and Masterkool International Publi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masterkool International and K W 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 K W Metal are associated (or correlated) with Masterkool International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masterkool International has no effect on the direction of K W i.e., K W and Masterkool International go up and down completely randomly.

Pair Corralation between K W and Masterkool International

Assuming the 90 days trading horizon K W is expected to generate 1.0 times less return on investment than Masterkool International. But when comparing it to its historical volatility, K W Metal is 1.0 times less risky than Masterkool International. It trades about 0.07 of its potential returns per unit of risk. Masterkool International Public is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Masterkool International Public on September 24, 2024 and sell it today you would lose (6.00) from holding Masterkool International Public or give up 16.67% of portfolio value over 90 days.

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

K W Metal  vs.  Masterkool International Publi

K W Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days K W Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Masterkool International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Masterkool International Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with K W and Masterkool International

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

The idea behind K W Metal and Masterkool International Public 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.