Correlation Between MNW and KMD

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both MNW and KMD 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 MNW and KMD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MNW and KMD, you can compare the effects of market volatilities on MNW and KMD 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 MNW with a short position of KMD. Check out your portfolio center. Please also check ongoing floating volatility patterns of MNW and KMD.

Diversification Opportunities for MNW and KMD

0.38
  Correlation Coefficient
 MNW
 KMD

Weak diversification

The 3 months correlation between MNW and KMD is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding MNW and KMD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMD and MNW 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 MNW are associated (or correlated) with KMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMD has no effect on the direction of MNW i.e., MNW and KMD go up and down completely randomly.

Pair Corralation between MNW and KMD

Assuming the 90 days trading horizon MNW is expected to generate 17.9 times more return on investment than KMD. However, MNW is 17.9 times more volatile than KMD. It trades about 0.1 of its potential returns per unit of risk. KMD is currently generating about -0.02 per unit of risk. If you would invest  75.00  in MNW on September 1, 2024 and sell it today you would lose (35.00) from holding MNW or give up 46.67% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

MNW  vs.  KMD

 Performance 
       Timeline  
MNW 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in MNW are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, MNW exhibited solid returns over the last few months and may actually be approaching a breakup point.
KMD 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in KMD are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, KMD exhibited solid returns over the last few months and may actually be approaching a breakup point.

MNW and KMD Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MNW and KMD

The main advantage of trading using opposite MNW and KMD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MNW position performs unexpectedly, KMD 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 KMD will offset losses from the drop in KMD's long position.
The idea behind MNW and KMD 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 Anywhere module to track or share privately all of your investments from the convenience of any device.

Other Complementary Tools

Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
ETFs
Find actively traded Exchange Traded Funds (ETF) from around the world
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators