Correlation Between Kingsmen CMTI and Prodigy Public

Can any of the company-specific risk be diversified away by investing in both Kingsmen CMTI and Prodigy Public 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 Prodigy Public 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 Prodigy Public, you can compare the effects of market volatilities on Kingsmen CMTI and Prodigy Public 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 Prodigy Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingsmen CMTI and Prodigy Public.

Diversification Opportunities for Kingsmen CMTI and Prodigy Public

0.06

Correlation Coefficient

Kingsmen CMTI  Prodigy Public

Significant diversification

The 3 months correlation between Kingsmen and Prodigy is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Kingsmen CMTI Public and Prodigy Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prodigy 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 Prodigy Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prodigy Public has no effect on the direction of Kingsmen CMTI i.e., Kingsmen CMTI and Prodigy Public go up and down completely randomly.

Pair Corralation between Kingsmen CMTI and Prodigy Public

Given the investment horizon of 90 days Kingsmen CMTI Public is expected to generate 1.0 times more return on investment than Prodigy Public. However, Kingsmen CMTI Public is 1.0 times less risky than Prodigy Public. It trades about 0.06 of its potential returns per unit of risk. Prodigy Public is currently generating about 0.06 per unit of risk. If you would invest  112.00  in Kingsmen CMTI Public on September 14, 2024 and sell it today you would earn a total of  6.00  from holding Kingsmen CMTI Public or generate 5.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

Kingsmen CMTI Public  vs.  Prodigy 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.

Prodigy Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prodigy Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Prodigy Public 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 Prodigy Public

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

The idea behind Kingsmen CMTI Public and Prodigy 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.