Correlation Between NewWave GBP and Kap Industrial

Can any of the company-specific risk be diversified away by investing in both NewWave GBP and Kap Industrial 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 NewWave GBP and Kap Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NewWave GBP Currency and Kap Industrial Holdings, you can compare the effects of market volatilities on NewWave GBP and Kap Industrial 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 NewWave GBP with a short position of Kap Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewWave GBP and Kap Industrial.

Diversification Opportunities for NewWave GBP and Kap Industrial

-0.67

Correlation Coefficient

NewWave GBP  Kap Industrial

Excellent diversification

The 3 months correlation between NewWave and Kap is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding NewWave GBP Currency and Kap Industrial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kap Industrial Holdings and NewWave GBP 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 NewWave GBP Currency are associated (or correlated) with Kap Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kap Industrial Holdings has no effect on the direction of NewWave GBP i.e., NewWave GBP and Kap Industrial go up and down completely randomly.

Pair Corralation between NewWave GBP and Kap Industrial

Assuming the 90 days trading horizon NewWave GBP Currency is expected to under-perform the Kap Industrial. But the etf apears to be less risky and, when comparing its historical volatility, NewWave GBP Currency is 3.83 times less risky than Kap Industrial. The etf trades about -0.02 of its potential returns per unit of risk. The Kap Industrial Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  21,600  in Kap Industrial Holdings on October 7, 2024 and sell it today you would earn a total of  7,000  from holding Kap Industrial Holdings or generate 32.41% return on investment over 90 days.

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

NewWave GBP Currency  vs.  Kap Industrial Holdings

NewWave GBP Currency

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NewWave GBP Currency are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, NewWave GBP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Kap Industrial Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kap Industrial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NewWave GBP and Kap Industrial

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

The idea behind NewWave GBP Currency and Kap Industrial 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.