Correlation Between Humble Fume and Kaival Brands

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

By analyzing existing cross correlation between Humble Fume and Kaival Brands Innovations, you can compare the effects of market volatilities on Humble Fume and Kaival Brands 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 Humble Fume with a short position of Kaival Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humble Fume and Kaival Brands.

Diversification Opportunities for Humble Fume and Kaival Brands

-0.39

Correlation Coefficient

Humble Fume  Kaival Brands

Very good diversification

The 3 months correlation between Humble and Kaival is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Humble Fume and Kaival Brands Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaival Brands Innovations and Humble Fume 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 Humble Fume are associated (or correlated) with Kaival Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaival Brands Innovations has no effect on the direction of Humble Fume i.e., Humble Fume and Kaival Brands go up and down completely randomly.

Pair Corralation between Humble Fume and Kaival Brands

If you would invest  63.00  in Kaival Brands Innovations on September 2, 2024 and sell it today you would earn a total of  9.00  from holding Kaival Brands Innovations or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Humble Fume  vs.  Kaival Brands Innovations

Humble Fume

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Humble Fume has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Humble Fume is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Kaival Brands Innovations

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kaival Brands Innovations are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Kaival Brands disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Humble Fume and Kaival Brands

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

The idea behind Humble Fume and Kaival Brands Innovations 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.