Correlation Between Zurn Elkay and Kurita Water

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

By analyzing existing cross correlation between Zurn Elkay Water and Kurita Water Industries, you can compare the effects of market volatilities on Zurn Elkay and Kurita Water 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 Zurn Elkay with a short position of Kurita Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurn Elkay and Kurita Water.

Diversification Opportunities for Zurn Elkay and Kurita Water

0.07

Correlation Coefficient

Zurn Elkay  Kurita Water

Significant diversification

The 3 months correlation between Zurn and Kurita is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Zurn Elkay Water and Kurita Water Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kurita Water Industries and Zurn Elkay 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 Zurn Elkay Water are associated (or correlated) with Kurita Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kurita Water Industries has no effect on the direction of Zurn Elkay i.e., Zurn Elkay and Kurita Water go up and down completely randomly.

Pair Corralation between Zurn Elkay and Kurita Water

Considering the 90-day investment horizon Zurn Elkay Water is expected to generate 0.59 times more return on investment than Kurita Water. However, Zurn Elkay Water is 1.69 times less risky than Kurita Water. It trades about 0.08 of its potential returns per unit of risk. Kurita Water Industries is currently generating about 0.01 per unit of risk. If you would invest  2,039  in Zurn Elkay Water on October 21, 2024 and sell it today you would earn a total of  1,779  from holding Zurn Elkay Water or generate 87.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	69.96%
Values	Daily Returns

Zurn Elkay Water  vs.  Kurita Water Industries

Zurn Elkay Water

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zurn Elkay Water are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Zurn Elkay is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Kurita Water Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kurita Water Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Kurita Water is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Zurn Elkay and Kurita Water

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

The idea behind Zurn Elkay Water and Kurita Water Industries 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.