Correlation Between Bedford Energy and Kiaro Holdings

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

By analyzing existing cross correlation between Bedford Energy and Kiaro Holdings Corp, you can compare the effects of market volatilities on Bedford Energy and Kiaro Holdings 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 Bedford Energy with a short position of Kiaro Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bedford Energy and Kiaro Holdings.

Diversification Opportunities for Bedford Energy and Kiaro Holdings

-1.0

Correlation Coefficient

Bedford Energy  Kiaro Holdings

Pay attention - limited upside

The 3 months correlation between Bedford and Kiaro is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding Bedford Energy and Kiaro Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiaro Holdings Corp and Bedford Energy 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 Bedford Energy are associated (or correlated) with Kiaro Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiaro Holdings Corp has no effect on the direction of Bedford Energy i.e., Bedford Energy and Kiaro Holdings go up and down completely randomly.

Pair Corralation between Bedford Energy and Kiaro Holdings

Given the investment horizon of 90 days Bedford Energy is expected to under-perform the Kiaro Holdings. In addition to that, Bedford Energy is 3.66 times more volatile than Kiaro Holdings Corp. It trades about -0.04 of its total potential returns per unit of risk. Kiaro Holdings Corp is currently generating about -0.04 per unit of volatility. If you would invest  0.62  in Kiaro Holdings Corp on August 31, 2024 and sell it today you would lose (0.11) from holding Kiaro Holdings Corp or give up 17.74% of portfolio value over 90 days.

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

Bedford Energy  vs.  Kiaro Holdings Corp

Bedford Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kiaro Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bedford Energy and Kiaro Holdings

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

The idea behind Bedford Energy and Kiaro Holdings Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.