Correlation Between Parker Hannifin and Kolibri Global

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

By analyzing existing cross correlation between Parker Hannifin and Kolibri Global Energy, you can compare the effects of market volatilities on Parker Hannifin and Kolibri Global 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 Parker Hannifin with a short position of Kolibri Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parker Hannifin and Kolibri Global.

Diversification Opportunities for Parker Hannifin and Kolibri Global

0.22

Correlation Coefficient

Parker Hannifin  Kolibri Global

Modest diversification

The 3 months correlation between Parker and Kolibri is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Parker Hannifin and Kolibri Global Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kolibri Global Energy and Parker Hannifin 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 Parker Hannifin are associated (or correlated) with Kolibri Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kolibri Global Energy has no effect on the direction of Parker Hannifin i.e., Parker Hannifin and Kolibri Global go up and down completely randomly.

Pair Corralation between Parker Hannifin and Kolibri Global

Allowing for the 90-day total investment horizon Parker Hannifin is expected to under-perform the Kolibri Global. But the stock apears to be less risky and, when comparing its historical volatility, Parker Hannifin is 2.66 times less risky than Kolibri Global. The stock trades about -0.02 of its potential returns per unit of risk. The Kolibri Global Energy is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  528.00  in Kolibri Global Energy on December 19, 2024 and sell it today you would earn a total of  210.00  from holding Kolibri Global Energy or generate 39.77% return on investment over 90 days.

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

Parker Hannifin  vs.  Kolibri Global Energy

Parker Hannifin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Parker Hannifin has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Parker Hannifin is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Kolibri Global Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kolibri Global Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Kolibri Global demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Parker Hannifin and Kolibri Global

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

The idea behind Parker Hannifin and Kolibri Global Energy 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.