Correlation Between BLUELINX HLDGS and Kingspan Group

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

By analyzing existing cross correlation between BLUELINX HLDGS DL 01 and Kingspan Group plc, you can compare the effects of market volatilities on BLUELINX HLDGS 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 BLUELINX HLDGS with a short position of Kingspan Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLUELINX HLDGS and Kingspan Group.

Diversification Opportunities for BLUELINX HLDGS and Kingspan Group

-0.83

Correlation Coefficient

BLUELINX HLDGS  Kingspan Group

Pay attention - limited upside

The 3 months correlation between BLUELINX and Kingspan is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding BLUELINX HLDGS DL 01 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 BLUELINX HLDGS 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 BLUELINX HLDGS DL 01 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 BLUELINX HLDGS i.e., BLUELINX HLDGS and Kingspan Group go up and down completely randomly.

Pair Corralation between BLUELINX HLDGS and Kingspan Group

Assuming the 90 days trading horizon BLUELINX HLDGS DL 01 is expected to generate 1.9 times more return on investment than Kingspan Group. However, BLUELINX HLDGS is 1.9 times more volatile than Kingspan Group plc. It trades about 0.04 of its potential returns per unit of risk. Kingspan Group plc is currently generating about -0.16 per unit of risk. If you would invest  9,600  in BLUELINX HLDGS DL 01 on September 22, 2024 and sell it today you would earn a total of  600.00  from holding BLUELINX HLDGS DL 01 or generate 6.25% return on investment over 90 days.

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

BLUELINX HLDGS DL 01  vs.  Kingspan Group plc

BLUELINX HLDGS DL

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BLUELINX HLDGS DL 01 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, BLUELINX HLDGS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with BLUELINX HLDGS and Kingspan Group

The main advantage of trading using opposite BLUELINX HLDGS and Kingspan Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLUELINX HLDGS 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 BLUELINX HLDGS DL 01 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.

Check out your portfolio center.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.