Correlation Between Kendrion and VanEck Polkadot

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

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

Diversification Opportunities for Kendrion and VanEck Polkadot

-0.66

Correlation Coefficient

Kendrion  VanEck Polkadot

Excellent diversification

The 3 months correlation between Kendrion and VanEck is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Kendrion NV and VanEck Polkadot ETN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Polkadot ETN and Kendrion 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 Kendrion NV are associated (or correlated) with VanEck Polkadot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Polkadot ETN has no effect on the direction of Kendrion i.e., Kendrion and VanEck Polkadot go up and down completely randomly.

Pair Corralation between Kendrion and VanEck Polkadot

Assuming the 90 days trading horizon Kendrion NV is expected to under-perform the VanEck Polkadot. But the stock apears to be less risky and, when comparing its historical volatility, Kendrion NV is 3.49 times less risky than VanEck Polkadot. The stock trades about -0.03 of its potential returns per unit of risk. The VanEck Polkadot ETN is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  281.00  in VanEck Polkadot ETN on September 20, 2024 and sell it today you would lose (25.00) from holding VanEck Polkadot ETN or give up 8.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Kendrion NV  vs.  VanEck Polkadot ETN

Kendrion NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kendrion NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

VanEck Polkadot ETN

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Polkadot ETN are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VanEck Polkadot unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kendrion and VanEck Polkadot

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

The idea behind Kendrion NV and VanEck Polkadot ETN 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.