Correlation Between Kap Industrial and Trellidor Holdings

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

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

Diversification Opportunities for Kap Industrial and Trellidor Holdings

0.34

Correlation Coefficient

Kap Industrial  Trellidor Holdings

Weak diversification

The 3 months correlation between Kap and Trellidor is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and Trellidor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trellidor Holdings and Kap Industrial 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 Kap Industrial Holdings are associated (or correlated) with Trellidor Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trellidor Holdings has no effect on the direction of Kap Industrial i.e., Kap Industrial and Trellidor Holdings go up and down completely randomly.

Pair Corralation between Kap Industrial and Trellidor Holdings

Assuming the 90 days trading horizon Kap Industrial Holdings is expected to under-perform the Trellidor Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Kap Industrial Holdings is 1.86 times less risky than Trellidor Holdings. The stock trades about -0.05 of its potential returns per unit of risk. The Trellidor Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  17,200  in Trellidor Holdings on September 12, 2024 and sell it today you would lose (600.00) from holding Trellidor Holdings or give up 3.49% of portfolio value over 90 days.

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

Kap Industrial Holdings  vs.  Trellidor Holdings

Kap Industrial Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kap Industrial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Kap Industrial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Trellidor Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trellidor Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Trellidor Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kap Industrial and Trellidor Holdings

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

The idea behind Kap Industrial Holdings and Trellidor Holdings 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.