Correlation Between Retail Food and K2 Asset
Can any of the company-specific risk be diversified away by investing in both Retail Food and K2 Asset 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 Retail Food and K2 Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Food Group and K2 Asset Management, you can compare the effects of market volatilities on Retail Food and K2 Asset 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 Retail Food with a short position of K2 Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and K2 Asset.
Diversification Opportunities for Retail Food and K2 Asset
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Retail and KAM is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and K2 Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K2 Asset Management and Retail Food 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 Retail Food Group are associated (or correlated) with K2 Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K2 Asset Management has no effect on the direction of Retail Food i.e., Retail Food and K2 Asset go up and down completely randomly.
Pair Corralation between Retail Food and K2 Asset
Assuming the 90 days trading horizon Retail Food Group is expected to under-perform the K2 Asset. But the stock apears to be less risky and, when comparing its historical volatility, Retail Food Group is 1.16 times less risky than K2 Asset. The stock trades about -0.1 of its potential returns per unit of risk. The K2 Asset Management is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 7.10 in K2 Asset Management on December 28, 2024 and sell it today you would lose (0.10) from holding K2 Asset Management or give up 1.41% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Retail Food Group vs. K2 Asset Management
Performance |
Timeline |
Retail Food Group |
K2 Asset Management |
Retail Food and K2 Asset Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Retail Food and K2 Asset
The main advantage of trading using opposite Retail Food and K2 Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Food position performs unexpectedly, K2 Asset 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 K2 Asset will offset losses from the drop in K2 Asset's long position.Retail Food vs. Step One Clothing | Retail Food vs. Sports Entertainment Group | Retail Food vs. Viva Leisure | Retail Food vs. Phoslock Environmental Technologies |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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