Correlation Between Lemonade and Kingstone Companies

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

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

Diversification Opportunities for Lemonade and Kingstone Companies

0.23

Correlation Coefficient

Lemonade  Kingstone Companies

Modest diversification

The 3 months correlation between Lemonade and Kingstone is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lemonade and Kingstone Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingstone Companies and Lemonade 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 Lemonade are associated (or correlated) with Kingstone Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingstone Companies has no effect on the direction of Lemonade i.e., Lemonade and Kingstone Companies go up and down completely randomly.

Pair Corralation between Lemonade and Kingstone Companies

Given the investment horizon of 90 days Lemonade is expected to under-perform the Kingstone Companies. In addition to that, Lemonade is 1.17 times more volatile than Kingstone Companies. It trades about -0.02 of its total potential returns per unit of risk. Kingstone Companies is currently generating about 0.04 per unit of volatility. If you would invest  1,506  in Kingstone Companies on December 21, 2024 and sell it today you would earn a total of  77.00  from holding Kingstone Companies or generate 5.11% return on investment over 90 days.

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

Lemonade  vs.  Kingstone Companies

Lemonade

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lemonade has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Kingstone Companies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kingstone Companies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Kingstone Companies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Lemonade and Kingstone Companies

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

The idea behind Lemonade and Kingstone Companies 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.