Correlation Between Kaival Brands and Humble Fume

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

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

Diversification Opportunities for Kaival Brands and Humble Fume

-0.39

Correlation Coefficient

Kaival Brands  Humble Fume

Very good diversification

The 3 months correlation between Kaival and Humble is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kaival Brands Innovations and Humble Fume in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humble Fume and Kaival Brands 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 Kaival Brands Innovations are associated (or correlated) with Humble Fume. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humble Fume has no effect on the direction of Kaival Brands i.e., Kaival Brands and Humble Fume go up and down completely randomly.

Pair Corralation between Kaival Brands and Humble Fume

If you would invest  63.00  in Kaival Brands Innovations on September 2, 2024 and sell it today you would earn a total of  9.00  from holding Kaival Brands Innovations or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Kaival Brands Innovations  vs.  Humble Fume

Kaival Brands Innovations

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kaival Brands Innovations are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Kaival Brands disclosed solid returns over the last few months and may actually be approaching a breakup point.

Humble Fume

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Humble Fume has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Humble Fume is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kaival Brands and Humble Fume

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

The idea behind Kaival Brands Innovations and Humble Fume 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.