Correlation Between Page Industries and Krebs Biochemicals

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

By analyzing existing cross correlation between Page Industries Limited and Krebs Biochemicals and, you can compare the effects of market volatilities on Page Industries and Krebs Biochemicals 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 Page Industries with a short position of Krebs Biochemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Page Industries and Krebs Biochemicals.

Diversification Opportunities for Page Industries and Krebs Biochemicals

0.33

Correlation Coefficient

Page Industries  Krebs Biochemicals

Weak diversification

The 3 months correlation between Page and Krebs is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Page Industries Limited and Krebs Biochemicals and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krebs Biochemicals and and Page Industries 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 Page Industries Limited are associated (or correlated) with Krebs Biochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krebs Biochemicals and has no effect on the direction of Page Industries i.e., Page Industries and Krebs Biochemicals go up and down completely randomly.

Pair Corralation between Page Industries and Krebs Biochemicals

Assuming the 90 days trading horizon Page Industries is expected to generate 4.26 times less return on investment than Krebs Biochemicals. But when comparing it to its historical volatility, Page Industries Limited is 2.6 times less risky than Krebs Biochemicals. It trades about 0.08 of its potential returns per unit of risk. Krebs Biochemicals and is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  8,397  in Krebs Biochemicals and on August 31, 2024 and sell it today you would earn a total of  2,896  from holding Krebs Biochemicals and or generate 34.49% return on investment over 90 days.

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

Page Industries Limited  vs.  Krebs Biochemicals and

Page Industries

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Page Industries Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Page Industries may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Krebs Biochemicals and

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Krebs Biochemicals and are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental drivers, Krebs Biochemicals demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Page Industries and Krebs Biochemicals

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

The idea behind Page Industries Limited and Krebs Biochemicals and 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.