Correlation Between Dcon Products and Kingsmen CMTI

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

By analyzing existing cross correlation between Dcon Products Public and Kingsmen CMTI Public, you can compare the effects of market volatilities on Dcon Products and Kingsmen CMTI 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 Dcon Products with a short position of Kingsmen CMTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dcon Products and Kingsmen CMTI.

Diversification Opportunities for Dcon Products and Kingsmen CMTI

0.51

Correlation Coefficient

Dcon Products  Kingsmen CMTI

Very weak diversification

The 3 months correlation between Dcon and Kingsmen is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dcon Products Public and Kingsmen CMTI Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsmen CMTI Public and Dcon Products 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 Dcon Products Public are associated (or correlated) with Kingsmen CMTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsmen CMTI Public has no effect on the direction of Dcon Products i.e., Dcon Products and Kingsmen CMTI go up and down completely randomly.

Pair Corralation between Dcon Products and Kingsmen CMTI

Assuming the 90 days trading horizon Dcon Products Public is expected to generate 1.11 times more return on investment than Kingsmen CMTI. However, Dcon Products is 1.11 times more volatile than Kingsmen CMTI Public. It trades about -0.02 of its potential returns per unit of risk. Kingsmen CMTI Public is currently generating about -0.04 per unit of risk. If you would invest  32.00  in Dcon Products Public on September 14, 2024 and sell it today you would lose (2.00) from holding Dcon Products Public or give up 6.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Dcon Products Public  vs.  Kingsmen CMTI Public

Dcon Products Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dcon Products Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Dcon Products is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Kingsmen CMTI Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingsmen CMTI Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Dcon Products and Kingsmen CMTI

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

The idea behind Dcon Products Public and Kingsmen CMTI Public 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.