Correlation Between Luxfer Holdings and Kingboard Chemical

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

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

Diversification Opportunities for Luxfer Holdings and Kingboard Chemical

-0.49

Correlation Coefficient

Luxfer Holdings  Kingboard Chemical

Very good diversification

The 3 months correlation between Luxfer and Kingboard is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Kingboard Chemical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingboard Chemical and Luxfer Holdings 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 Luxfer Holdings PLC are associated (or correlated) with Kingboard Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingboard Chemical has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Kingboard Chemical go up and down completely randomly.

Pair Corralation between Luxfer Holdings and Kingboard Chemical

If you would invest  1,346  in Luxfer Holdings PLC on October 26, 2024 and sell it today you would earn a total of  90.00  from holding Luxfer Holdings PLC or generate 6.69% return on investment over 90 days.

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

Luxfer Holdings PLC  vs.  Kingboard Chemical Holdings

Luxfer Holdings PLC

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Luxfer Holdings PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Luxfer Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Kingboard Chemical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kingboard Chemical Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Kingboard Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Luxfer Holdings and Kingboard Chemical

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

The idea behind Luxfer Holdings PLC and Kingboard Chemical Holdings 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.