Correlation Between Matador Resources and Kawasaki Kisen

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

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

Diversification Opportunities for Matador Resources and Kawasaki Kisen

-0.65

Correlation Coefficient

Matador Resources  Kawasaki Kisen

Excellent diversification

The 3 months correlation between Matador and Kawasaki is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Matador Resources and Kawasaki Kisen Kaisha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kawasaki Kisen Kaisha and Matador Resources 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 Matador Resources are associated (or correlated) with Kawasaki Kisen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kawasaki Kisen Kaisha has no effect on the direction of Matador Resources i.e., Matador Resources and Kawasaki Kisen go up and down completely randomly.

Pair Corralation between Matador Resources and Kawasaki Kisen

Given the investment horizon of 90 days Matador Resources is expected to under-perform the Kawasaki Kisen. In addition to that, Matador Resources is 1.22 times more volatile than Kawasaki Kisen Kaisha. It trades about -0.05 of its total potential returns per unit of risk. Kawasaki Kisen Kaisha is currently generating about 0.03 per unit of volatility. If you would invest  1,410  in Kawasaki Kisen Kaisha on December 30, 2024 and sell it today you would earn a total of  38.00  from holding Kawasaki Kisen Kaisha or generate 2.7% return on investment over 90 days.

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

Matador Resources  vs.  Kawasaki Kisen Kaisha

Matador Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matador Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Kawasaki Kisen Kaisha

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kawasaki Kisen Kaisha are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking signals, Kawasaki Kisen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Matador Resources and Kawasaki Kisen

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

The idea behind Matador Resources and Kawasaki Kisen Kaisha 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.