Correlation Between Kardex and Holcim AG

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

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

Diversification Opportunities for Kardex and Holcim AG

-0.28

Correlation Coefficient

Kardex  Holcim AG

Very good diversification

The 3 months correlation between Kardex and Holcim is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Kardex and Holcim AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim AG and Kardex 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 Kardex are associated (or correlated) with Holcim AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holcim AG has no effect on the direction of Kardex i.e., Kardex and Holcim AG go up and down completely randomly.

Pair Corralation between Kardex and Holcim AG

Assuming the 90 days trading horizon Kardex is expected to generate 2.0 times less return on investment than Holcim AG. In addition to that, Kardex is 1.23 times more volatile than Holcim AG. It trades about 0.06 of its total potential returns per unit of risk. Holcim AG is currently generating about 0.14 per unit of volatility. If you would invest  8,136  in Holcim AG on September 14, 2024 and sell it today you would earn a total of  882.00  from holding Holcim AG or generate 10.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Kardex  vs.  Holcim AG

Kardex

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kardex are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Kardex is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Holcim AG

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Holcim AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Holcim AG may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kardex and Holcim AG

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

The idea behind Kardex and Holcim AG 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.