Correlation Between Nutrien and KS AG

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

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

Diversification Opportunities for Nutrien and KS AG

0.61

Correlation Coefficient

Nutrien  KS AG

Poor diversification

The 3 months correlation between Nutrien and KPLUY is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Nutrien and KS AG DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KS AG DRC and Nutrien 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 Nutrien are associated (or correlated) with KS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KS AG DRC has no effect on the direction of Nutrien i.e., Nutrien and KS AG go up and down completely randomly.

Pair Corralation between Nutrien and KS AG

Considering the 90-day investment horizon Nutrien is expected to under-perform the KS AG. But the stock apears to be less risky and, when comparing its historical volatility, Nutrien is 1.82 times less risky than KS AG. The stock trades about -0.05 of its potential returns per unit of risk. The KS AG DRC is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  598.00  in KS AG DRC on September 1, 2024 and sell it today you would lose (7.00) from holding KS AG DRC or give up 1.17% of portfolio value over 90 days.

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

Nutrien  vs.  KS AG DRC

Nutrien

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nutrien are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nutrien is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

KS AG DRC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KS AG DRC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, KS AG may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Nutrien and KS AG

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

The idea behind Nutrien and KS AG DRC 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.