Correlation Between M Large and Kngt Clb

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

By analyzing existing cross correlation between M Large Cap and Kngt Clb Larg, you can compare the effects of market volatilities on M Large and Kngt Clb 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 M Large with a short position of Kngt Clb. Check out your portfolio center. Please also check ongoing floating volatility patterns of M Large and Kngt Clb.

Diversification Opportunities for M Large and Kngt Clb

0.58

Correlation Coefficient

M Large  Kngt Clb

Very weak diversification

The 3 months correlation between MTCGX and Kngt is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding M Large Cap and Kngt Clb Larg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kngt Clb Larg and M Large 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 M Large Cap are associated (or correlated) with Kngt Clb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kngt Clb Larg has no effect on the direction of M Large i.e., M Large and Kngt Clb go up and down completely randomly.

Pair Corralation between M Large and Kngt Clb

Assuming the 90 days horizon M Large Cap is expected to under-perform the Kngt Clb. In addition to that, M Large is 2.21 times more volatile than Kngt Clb Larg. It trades about -0.16 of its total potential returns per unit of risk. Kngt Clb Larg is currently generating about -0.03 per unit of volatility. If you would invest  2,155  in Kngt Clb Larg on October 9, 2024 and sell it today you would lose (18.00) from holding Kngt Clb Larg or give up 0.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

M Large Cap  vs.  Kngt Clb Larg

M Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days M Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, M Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kngt Clb Larg

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kngt Clb Larg are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Kngt Clb is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with M Large and Kngt Clb

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

The idea behind M Large Cap and Kngt Clb Larg 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.