Correlation Between FBD Holdings and Kingspan Group

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

By analyzing existing cross correlation between FBD Holdings PLC and Kingspan Group plc, you can compare the effects of market volatilities on FBD Holdings and Kingspan Group 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 FBD Holdings with a short position of Kingspan Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of FBD Holdings and Kingspan Group.

Diversification Opportunities for FBD Holdings and Kingspan Group

0.18

Correlation Coefficient

FBD Holdings  Kingspan Group

Average diversification

The 3 months correlation between FBD and Kingspan is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding FBD Holdings PLC and Kingspan Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingspan Group plc and FBD Holdings 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 FBD Holdings PLC are associated (or correlated) with Kingspan Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingspan Group plc has no effect on the direction of FBD Holdings i.e., FBD Holdings and Kingspan Group go up and down completely randomly.

Pair Corralation between FBD Holdings and Kingspan Group

Assuming the 90 days trading horizon FBD Holdings PLC is expected to generate 0.87 times more return on investment than Kingspan Group. However, FBD Holdings PLC is 1.15 times less risky than Kingspan Group. It trades about 0.02 of its potential returns per unit of risk. Kingspan Group plc is currently generating about -0.07 per unit of risk. If you would invest  1,280  in FBD Holdings PLC on September 12, 2024 and sell it today you would earn a total of  20.00  from holding FBD Holdings PLC or generate 1.56% return on investment over 90 days.

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

FBD Holdings PLC  vs.  Kingspan Group plc

FBD Holdings PLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FBD Holdings PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, FBD Holdings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Kingspan Group plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingspan Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with FBD Holdings and Kingspan Group

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

The idea behind FBD Holdings PLC and Kingspan Group plc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.