Correlation Between Western Investment and KDA

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

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

Diversification Opportunities for Western Investment and KDA

0.53

Correlation Coefficient

Western Investment  KDA

Very weak diversification

The 3 months correlation between Western and KDA is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and KDA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDA Group and Western Investment 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 Western Investment are associated (or correlated) with KDA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDA Group has no effect on the direction of Western Investment i.e., Western Investment and KDA go up and down completely randomly.

Pair Corralation between Western Investment and KDA

Given the investment horizon of 90 days Western Investment is expected to generate 0.9 times more return on investment than KDA. However, Western Investment is 1.11 times less risky than KDA. It trades about 0.52 of its potential returns per unit of risk. KDA Group is currently generating about 0.02 per unit of risk. If you would invest  46.00  in Western Investment on October 9, 2024 and sell it today you would earn a total of  17.00  from holding Western Investment or generate 36.96% return on investment over 90 days.

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

Western Investment  vs.  KDA Group

Western Investment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Western Investment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Western Investment showed solid returns over the last few months and may actually be approaching a breakup point.

KDA Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KDA Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, KDA is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Western Investment and KDA

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

The idea behind Western Investment and KDA Group 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..