Correlation Between Sunflag Iron and Kellton Tech

Can any of the company-specific risk be diversified away by investing in both Sunflag Iron and Kellton Tech 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 Sunflag Iron and Kellton Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sunflag Iron And and Kellton Tech Solutions, you can compare the effects of market volatilities on Sunflag Iron and Kellton Tech 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 Sunflag Iron with a short position of Kellton Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunflag Iron and Kellton Tech.

Diversification Opportunities for Sunflag Iron and Kellton Tech

0.6

Correlation Coefficient

Sunflag Iron  Kellton Tech

Poor diversification

The 3 months correlation between Sunflag and Kellton is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sunflag Iron And and Kellton Tech Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellton Tech Solutions and Sunflag Iron 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 Sunflag Iron And are associated (or correlated) with Kellton Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellton Tech Solutions has no effect on the direction of Sunflag Iron i.e., Sunflag Iron and Kellton Tech go up and down completely randomly.

Pair Corralation between Sunflag Iron and Kellton Tech

Assuming the 90 days trading horizon Sunflag Iron is expected to generate 1.43 times less return on investment than Kellton Tech. But when comparing it to its historical volatility, Sunflag Iron And is 1.12 times less risky than Kellton Tech. It trades about 0.06 of its potential returns per unit of risk. Kellton Tech Solutions is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,605  in Kellton Tech Solutions on October 26, 2024 and sell it today you would earn a total of  10,130  from holding Kellton Tech Solutions or generate 180.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Sunflag Iron And  vs.  Kellton Tech Solutions

Sunflag Iron And

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sunflag Iron And are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting essential indicators, Sunflag Iron reported solid returns over the last few months and may actually be approaching a breakup point.

Kellton Tech Solutions

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kellton Tech Solutions are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Kellton Tech displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunflag Iron and Kellton Tech

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

The idea behind Sunflag Iron And and Kellton Tech Solutions 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.