Correlation Between Cultural Investment and King-Strong New

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

By analyzing existing cross correlation between Cultural Investment Holdings and King Strong New Material, you can compare the effects of market volatilities on Cultural Investment and King-Strong New 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 Cultural Investment with a short position of King-Strong New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cultural Investment and King-Strong New.

Diversification Opportunities for Cultural Investment and King-Strong New

0.84

Correlation Coefficient

Cultural Investment  King-Strong New

Very poor diversification

The 3 months correlation between Cultural and King-Strong is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Cultural Investment Holdings and King Strong New Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Strong New and Cultural 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 Cultural Investment Holdings are associated (or correlated) with King-Strong New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Strong New has no effect on the direction of Cultural Investment i.e., Cultural Investment and King-Strong New go up and down completely randomly.

Pair Corralation between Cultural Investment and King-Strong New

Assuming the 90 days trading horizon Cultural Investment is expected to generate 1.94 times less return on investment than King-Strong New. But when comparing it to its historical volatility, Cultural Investment Holdings is 1.4 times less risky than King-Strong New. It trades about 0.14 of its potential returns per unit of risk. King Strong New Material is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,543  in King Strong New Material on August 31, 2024 and sell it today you would earn a total of  806.00  from holding King Strong New Material or generate 52.24% return on investment over 90 days.

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

Cultural Investment Holdings  vs.  King Strong New Material

Cultural Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cultural Investment Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cultural Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

King Strong New

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in King Strong New Material are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, King-Strong New sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cultural Investment and King-Strong New

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

The idea behind Cultural Investment Holdings and King Strong New Material 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.