Correlation Between Kingsmen CMTI and Dcon Products

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

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

Diversification Opportunities for Kingsmen CMTI and Dcon Products

0.51

Correlation Coefficient

Kingsmen CMTI  Dcon Products

Very weak diversification

The 3 months correlation between Kingsmen and Dcon is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kingsmen CMTI Public and Dcon Products Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dcon Products Public and Kingsmen CMTI 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 Kingsmen CMTI Public are associated (or correlated) with Dcon Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dcon Products Public has no effect on the direction of Kingsmen CMTI i.e., Kingsmen CMTI and Dcon Products go up and down completely randomly.

Pair Corralation between Kingsmen CMTI and Dcon Products

Given the investment horizon of 90 days Kingsmen CMTI Public is expected to under-perform the Dcon Products. But the stock apears to be less risky and, when comparing its historical volatility, Kingsmen CMTI Public is 1.11 times less risky than Dcon Products. The stock trades about -0.04 of its potential returns per unit of risk. The Dcon Products Public is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  32.00  in Dcon Products Public on September 14, 2024 and sell it today you would lose (2.00) from holding Dcon Products Public or give up 6.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Kingsmen CMTI Public  vs.  Dcon Products Public

Kingsmen CMTI Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingsmen CMTI Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Dcon Products Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dcon Products Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Dcon Products is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Kingsmen CMTI and Dcon Products

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

The idea behind Kingsmen CMTI Public and Dcon Products Public 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.