Correlation Between Goodbye Kansas and Mekonomen

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

By analyzing existing cross correlation between Goodbye Kansas Group and Mekonomen AB, you can compare the effects of market volatilities on Goodbye Kansas and Mekonomen 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 Goodbye Kansas with a short position of Mekonomen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodbye Kansas and Mekonomen.

Diversification Opportunities for Goodbye Kansas and Mekonomen

0.58

Correlation Coefficient

Goodbye Kansas  Mekonomen

Very weak diversification

The 3 months correlation between Goodbye and Mekonomen is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Goodbye Kansas Group and Mekonomen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mekonomen AB and Goodbye Kansas 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 Goodbye Kansas Group are associated (or correlated) with Mekonomen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mekonomen AB has no effect on the direction of Goodbye Kansas i.e., Goodbye Kansas and Mekonomen go up and down completely randomly.

Pair Corralation between Goodbye Kansas and Mekonomen

Assuming the 90 days trading horizon Goodbye Kansas Group is expected to generate 3.8 times more return on investment than Mekonomen. However, Goodbye Kansas is 3.8 times more volatile than Mekonomen AB. It trades about 0.11 of its potential returns per unit of risk. Mekonomen AB is currently generating about 0.04 per unit of risk. If you would invest  105.00  in Goodbye Kansas Group on September 17, 2024 and sell it today you would earn a total of  37.00  from holding Goodbye Kansas Group or generate 35.24% return on investment over 90 days.

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

Goodbye Kansas Group  vs.  Mekonomen AB

Goodbye Kansas Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goodbye Kansas Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, Goodbye Kansas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mekonomen AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mekonomen AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mekonomen is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Goodbye Kansas and Mekonomen

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

The idea behind Goodbye Kansas Group and Mekonomen AB 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.