Correlation Between K Bro and Calian Technologies

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

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

Diversification Opportunities for K Bro and Calian Technologies

-0.32

Correlation Coefficient

K Bro  Calian Technologies

Very good diversification

The 3 months correlation between KBL and Calian is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding K Bro Linen and Calian Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calian Technologies and K Bro 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 K Bro Linen are associated (or correlated) with Calian Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calian Technologies has no effect on the direction of K Bro i.e., K Bro and Calian Technologies go up and down completely randomly.

Pair Corralation between K Bro and Calian Technologies

Assuming the 90 days trading horizon K Bro Linen is expected to generate 0.89 times more return on investment than Calian Technologies. However, K Bro Linen is 1.12 times less risky than Calian Technologies. It trades about 0.1 of its potential returns per unit of risk. Calian Technologies is currently generating about -0.05 per unit of risk. If you would invest  3,151  in K Bro Linen on September 2, 2024 and sell it today you would earn a total of  664.00  from holding K Bro Linen or generate 21.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

K Bro Linen  vs.  Calian Technologies

K Bro Linen

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in K Bro Linen are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, K Bro may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Calian Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Calian Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Calian Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with K Bro and Calian Technologies

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

The idea behind K Bro Linen and Calian Technologies 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.