Correlation Between Walker Dunlop and Kohat Cement

Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and Kohat Cement 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 Walker Dunlop and Kohat Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walker Dunlop and Kohat Cement, you can compare the effects of market volatilities on Walker Dunlop and Kohat Cement 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 Walker Dunlop with a short position of Kohat Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and Kohat Cement.

Diversification Opportunities for Walker Dunlop and Kohat Cement

-0.22

Correlation Coefficient

Walker Dunlop  Kohat Cement

Very good diversification

The 3 months correlation between Walker and Kohat is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Kohat Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kohat Cement and Walker Dunlop 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 Walker Dunlop are associated (or correlated) with Kohat Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kohat Cement has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Kohat Cement go up and down completely randomly.

Pair Corralation between Walker Dunlop and Kohat Cement

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Kohat Cement. But the stock apears to be less risky and, when comparing its historical volatility, Walker Dunlop is 1.99 times less risky than Kohat Cement. The stock trades about -0.12 of its potential returns per unit of risk. The Kohat Cement is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  30,501  in Kohat Cement on October 8, 2024 and sell it today you would earn a total of  7,544  from holding Kohat Cement or generate 24.73% return on investment over 90 days.

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

Walker Dunlop  vs.  Kohat Cement

Walker Dunlop

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kohat Cement

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kohat Cement are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Kohat Cement sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walker Dunlop and Kohat Cement

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

The idea behind Walker Dunlop and Kohat Cement 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.