Correlation Between Lendlease and Kingspan Group

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

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

Diversification Opportunities for Lendlease and Kingspan Group

0.52

Correlation Coefficient

Lendlease  Kingspan Group

Very weak diversification

The 3 months correlation between Lendlease and Kingspan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Kingspan Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingspan Group plc and Lendlease 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 Lendlease Group are associated (or correlated) with Kingspan Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingspan Group plc has no effect on the direction of Lendlease i.e., Lendlease and Kingspan Group go up and down completely randomly.

Pair Corralation between Lendlease and Kingspan Group

Assuming the 90 days trading horizon Lendlease Group is expected to under-perform the Kingspan Group. But the stock apears to be less risky and, when comparing its historical volatility, Lendlease Group is 1.46 times less risky than Kingspan Group. The stock trades about -0.01 of its potential returns per unit of risk. The Kingspan Group plc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6,890  in Kingspan Group plc on October 26, 2024 and sell it today you would earn a total of  20.00  from holding Kingspan Group plc or generate 0.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Lendlease Group  vs.  Kingspan Group plc

Lendlease Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lendlease Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Kingspan Group plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingspan Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Lendlease and Kingspan Group

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

The idea behind Lendlease Group and Kingspan Group 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.

Check out your portfolio center.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.