Correlation Between NI Holdings and Kingstone Companies

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

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

Diversification Opportunities for NI Holdings and Kingstone Companies

0.84

Correlation Coefficient

NI Holdings  Kingstone Companies

Very poor diversification

The 3 months correlation between NODK and Kingstone is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Kingstone Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingstone Companies and NI 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 NI Holdings are associated (or correlated) with Kingstone Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingstone Companies has no effect on the direction of NI Holdings i.e., NI Holdings and Kingstone Companies go up and down completely randomly.

Pair Corralation between NI Holdings and Kingstone Companies

Given the investment horizon of 90 days NI Holdings is expected to generate 5.23 times less return on investment than Kingstone Companies. But when comparing it to its historical volatility, NI Holdings is 3.02 times less risky than Kingstone Companies. It trades about 0.13 of its potential returns per unit of risk. Kingstone Companies is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  919.00  in Kingstone Companies on September 12, 2024 and sell it today you would earn a total of  619.00  from holding Kingstone Companies or generate 67.36% return on investment over 90 days.

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

NI Holdings  vs.  Kingstone Companies

NI Holdings

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NI Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, NI Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kingstone Companies

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kingstone Companies are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Kingstone Companies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NI Holdings and Kingstone Companies

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

The idea behind NI Holdings and Kingstone Companies 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.