Correlation Between SAFETY MEDICAL and Kingspan Group

Can any of the company-specific risk be diversified away by investing in both SAFETY MEDICAL and Kingspan Group 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 SAFETY MEDICAL and Kingspan Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SAFETY MEDICAL PROD and Kingspan Group plc, you can compare the effects of market volatilities on SAFETY MEDICAL and Kingspan Group 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 SAFETY MEDICAL with a short position of Kingspan Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAFETY MEDICAL and Kingspan Group.

Diversification Opportunities for SAFETY MEDICAL and Kingspan Group

0.89

Correlation Coefficient

SAFETY MEDICAL  Kingspan Group

Very poor diversification

The 3 months correlation between SAFETY and Kingspan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding SAFETY MEDICAL PROD and Kingspan Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingspan Group plc and SAFETY MEDICAL 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 SAFETY MEDICAL PROD are associated (or correlated) with Kingspan Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingspan Group plc has no effect on the direction of SAFETY MEDICAL i.e., SAFETY MEDICAL and Kingspan Group go up and down completely randomly.

Pair Corralation between SAFETY MEDICAL and Kingspan Group

Assuming the 90 days trading horizon SAFETY MEDICAL PROD is expected to under-perform the Kingspan Group. In addition to that, SAFETY MEDICAL is 1.81 times more volatile than Kingspan Group plc. It trades about -0.25 of its total potential returns per unit of risk. Kingspan Group plc is currently generating about -0.12 per unit of volatility. If you would invest  8,060  in Kingspan Group plc on September 18, 2024 and sell it today you would lose (975.00) from holding Kingspan Group plc or give up 12.1% of portfolio value over 90 days.

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

SAFETY MEDICAL PROD  vs.  Kingspan Group plc

SAFETY MEDICAL PROD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAFETY MEDICAL PROD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Kingspan Group plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingspan Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SAFETY MEDICAL and Kingspan Group

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

The idea behind SAFETY MEDICAL PROD and Kingspan Group plc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.