Correlation Between Osaka Steel and Kite Realty

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

By analyzing existing cross correlation between Osaka Steel Co, and Kite Realty Group, you can compare the effects of market volatilities on Osaka Steel and Kite Realty 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 Osaka Steel with a short position of Kite Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Osaka Steel and Kite Realty.

Diversification Opportunities for Osaka Steel and Kite Realty

0.0

Correlation Coefficient

Osaka Steel  Kite Realty

Pay attention - limited upside

The 3 months correlation between Osaka and Kite is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Osaka Steel Co, and Kite Realty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kite Realty Group and Osaka Steel 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 Osaka Steel Co, are associated (or correlated) with Kite Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kite Realty Group has no effect on the direction of Osaka Steel i.e., Osaka Steel and Kite Realty go up and down completely randomly.

Pair Corralation between Osaka Steel and Kite Realty

Assuming the 90 days horizon Osaka Steel is expected to generate 18.64 times less return on investment than Kite Realty. But when comparing it to its historical volatility, Osaka Steel Co, is 18.92 times less risky than Kite Realty. It trades about 0.07 of its potential returns per unit of risk. Kite Realty Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,968  in Kite Realty Group on October 22, 2024 and sell it today you would earn a total of  363.00  from holding Kite Realty Group or generate 18.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.56%
Values	Daily Returns

Osaka Steel Co,  vs.  Kite Realty Group

Osaka Steel Co,

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Osaka Steel Co, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Osaka Steel is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Kite Realty Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kite Realty Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Osaka Steel and Kite Realty

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

The idea behind Osaka Steel Co, and Kite Realty Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.