Correlation Between Hawkins and Kronos Worldwide

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

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

Diversification Opportunities for Hawkins and Kronos Worldwide

0.37

Correlation Coefficient

Hawkins  Kronos Worldwide

Weak diversification

The 3 months correlation between Hawkins and Kronos is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hawkins and Kronos Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Worldwide and Hawkins 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 Hawkins are associated (or correlated) with Kronos Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Worldwide has no effect on the direction of Hawkins i.e., Hawkins and Kronos Worldwide go up and down completely randomly.

Pair Corralation between Hawkins and Kronos Worldwide

Given the investment horizon of 90 days Hawkins is expected to generate 0.89 times more return on investment than Kronos Worldwide. However, Hawkins is 1.12 times less risky than Kronos Worldwide. It trades about 0.14 of its potential returns per unit of risk. Kronos Worldwide is currently generating about 0.05 per unit of risk. If you would invest  4,007  in Hawkins on August 31, 2024 and sell it today you would earn a total of  9,332  from holding Hawkins or generate 232.89% return on investment over 90 days.

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

Hawkins  vs.  Kronos Worldwide

Hawkins

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward-looking signals, Hawkins may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Kronos Worldwide

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kronos Worldwide are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Kronos Worldwide is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hawkins and Kronos Worldwide

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

The idea behind Hawkins and Kronos Worldwide 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.