Correlation Between Palomar Holdings and Kerry Logistics

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Can any of the company-specific risk be diversified away by investing in both Palomar Holdings and Kerry Logistics 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 Palomar Holdings and Kerry Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palomar Holdings and Kerry Logistics Network, you can compare the effects of market volatilities on Palomar Holdings and Kerry Logistics 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 Palomar Holdings with a short position of Kerry Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palomar Holdings and Kerry Logistics.

Diversification Opportunities for Palomar Holdings and Kerry Logistics

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between Palomar and Kerry is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and Kerry Logistics Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kerry Logistics Network and Palomar 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 Palomar Holdings are associated (or correlated) with Kerry Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kerry Logistics Network has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and Kerry Logistics go up and down completely randomly.

Pair Corralation between Palomar Holdings and Kerry Logistics

Given the investment horizon of 90 days Palomar Holdings is expected to generate 0.87 times more return on investment than Kerry Logistics. However, Palomar Holdings is 1.14 times less risky than Kerry Logistics. It trades about 0.1 of its potential returns per unit of risk. Kerry Logistics Network is currently generating about -0.13 per unit of risk. If you would invest  9,097  in Palomar Holdings on October 26, 2024 and sell it today you would earn a total of  1,174  from holding Palomar Holdings or generate 12.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy93.65%
ValuesDaily Returns

Palomar Holdings  vs.  Kerry Logistics Network

 Performance 
       Timeline  
Palomar Holdings 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Palomar Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting primary indicators, Palomar Holdings reported solid returns over the last few months and may actually be approaching a breakup point.
Kerry Logistics Network 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kerry Logistics Network has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Palomar Holdings and Kerry Logistics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Palomar Holdings and Kerry Logistics

The main advantage of trading using opposite Palomar Holdings and Kerry Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palomar Holdings position performs unexpectedly, Kerry Logistics 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 Kerry Logistics will offset losses from the drop in Kerry Logistics' long position.
The idea behind Palomar Holdings and Kerry Logistics Network 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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