Correlation Between Lowland Investment and Kingfisher PLC

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

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

Diversification Opportunities for Lowland Investment and Kingfisher PLC

0.44

Correlation Coefficient

Lowland Investment  Kingfisher PLC

Very weak diversification

The 3 months correlation between Lowland and Kingfisher is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lowland Investment Co and Kingfisher PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingfisher PLC and Lowland Investment 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 Lowland Investment Co are associated (or correlated) with Kingfisher PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingfisher PLC has no effect on the direction of Lowland Investment i.e., Lowland Investment and Kingfisher PLC go up and down completely randomly.

Pair Corralation between Lowland Investment and Kingfisher PLC

Assuming the 90 days trading horizon Lowland Investment Co is expected to generate 0.33 times more return on investment than Kingfisher PLC. However, Lowland Investment Co is 2.99 times less risky than Kingfisher PLC. It trades about 0.13 of its potential returns per unit of risk. Kingfisher PLC is currently generating about 0.03 per unit of risk. If you would invest  12,250  in Lowland Investment Co on December 30, 2024 and sell it today you would earn a total of  850.00  from holding Lowland Investment Co or generate 6.94% return on investment over 90 days.

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

Lowland Investment Co  vs.  Kingfisher PLC

Lowland Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lowland Investment Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Lowland Investment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Kingfisher PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfisher PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Kingfisher PLC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lowland Investment and Kingfisher PLC

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

The idea behind Lowland Investment Co and Kingfisher 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.