Correlation Between Robinsons Retail and Bright Kindle

Can any of the company-specific risk be diversified away by investing in both Robinsons Retail and Bright Kindle 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 Robinsons Retail and Bright Kindle into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Robinsons Retail Holdings and Bright Kindle Resources, you can compare the effects of market volatilities on Robinsons Retail and Bright Kindle 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 Robinsons Retail with a short position of Bright Kindle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Robinsons Retail and Bright Kindle.

Diversification Opportunities for Robinsons Retail and Bright Kindle

-0.45

Correlation Coefficient

Robinsons Retail  Bright Kindle

Very good diversification

The 3 months correlation between Robinsons and Bright is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Robinsons Retail Holdings and Bright Kindle Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Kindle Resources and Robinsons Retail 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 Robinsons Retail Holdings are associated (or correlated) with Bright Kindle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Kindle Resources has no effect on the direction of Robinsons Retail i.e., Robinsons Retail and Bright Kindle go up and down completely randomly.

Pair Corralation between Robinsons Retail and Bright Kindle

Assuming the 90 days trading horizon Robinsons Retail Holdings is expected to under-perform the Bright Kindle. But the stock apears to be less risky and, when comparing its historical volatility, Robinsons Retail Holdings is 3.19 times less risky than Bright Kindle. The stock trades about -0.04 of its potential returns per unit of risk. The Bright Kindle Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  102.00  in Bright Kindle Resources on November 20, 2024 and sell it today you would earn a total of  14.00  from holding Bright Kindle Resources or generate 13.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.98%
Values	Daily Returns

Robinsons Retail Holdings  vs.  Bright Kindle Resources

Robinsons Retail Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Robinsons Retail Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Robinsons Retail is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Bright Kindle Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Kindle Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Bright Kindle exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Robinsons Retail and Bright Kindle

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

The idea behind Robinsons Retail Holdings and Bright Kindle Resources 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.