Correlation Between QUEEN S and KAUFMAN ET

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

By analyzing existing cross correlation between QUEEN S ROAD and KAUFMAN ET BROAD, you can compare the effects of market volatilities on QUEEN S and KAUFMAN ET 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 QUEEN S with a short position of KAUFMAN ET. Check out your portfolio center. Please also check ongoing floating volatility patterns of QUEEN S and KAUFMAN ET.

Diversification Opportunities for QUEEN S and KAUFMAN ET

-0.03

Correlation Coefficient

QUEEN S  KAUFMAN ET

Good diversification

The 3 months correlation between QUEEN and KAUFMAN is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding QUEEN S ROAD and KAUFMAN ET BROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAUFMAN ET BROAD and QUEEN S 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 QUEEN S ROAD are associated (or correlated) with KAUFMAN ET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAUFMAN ET BROAD has no effect on the direction of QUEEN S i.e., QUEEN S and KAUFMAN ET go up and down completely randomly.

Pair Corralation between QUEEN S and KAUFMAN ET

Assuming the 90 days horizon QUEEN S ROAD is expected to generate 2.01 times more return on investment than KAUFMAN ET. However, QUEEN S is 2.01 times more volatile than KAUFMAN ET BROAD. It trades about 0.04 of its potential returns per unit of risk. KAUFMAN ET BROAD is currently generating about -0.01 per unit of risk. If you would invest  46.00  in QUEEN S ROAD on September 5, 2024 and sell it today you would earn a total of  3.00  from holding QUEEN S ROAD or generate 6.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

QUEEN S ROAD  vs.  KAUFMAN ET BROAD

QUEEN S ROAD

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in QUEEN S ROAD are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, QUEEN S may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KAUFMAN ET BROAD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KAUFMAN ET BROAD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, KAUFMAN ET is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with QUEEN S and KAUFMAN ET

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

The idea behind QUEEN S ROAD and KAUFMAN ET BROAD 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.