Correlation Between Kimberly Clark and El Puerto

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

By analyzing existing cross correlation between Kimberly Clark de Mxico and El Puerto de, you can compare the effects of market volatilities on Kimberly Clark and El Puerto 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 Kimberly Clark with a short position of El Puerto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimberly Clark and El Puerto.

Diversification Opportunities for Kimberly Clark and El Puerto

0.86

Correlation Coefficient

Kimberly Clark  El Puerto

Very poor diversification

The 3 months correlation between Kimberly and LIVEPOLC-1 is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kimberly Clark de Mxico and El Puerto de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Puerto de and Kimberly Clark 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 Kimberly Clark de Mxico are associated (or correlated) with El Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Puerto de has no effect on the direction of Kimberly Clark i.e., Kimberly Clark and El Puerto go up and down completely randomly.

Pair Corralation between Kimberly Clark and El Puerto

Assuming the 90 days trading horizon Kimberly Clark de Mxico is expected to under-perform the El Puerto. But the stock apears to be less risky and, when comparing its historical volatility, Kimberly Clark de Mxico is 1.15 times less risky than El Puerto. The stock trades about -0.2 of its potential returns per unit of risk. The El Puerto de is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  11,389  in El Puerto de on September 2, 2024 and sell it today you would lose (1,194) from holding El Puerto de or give up 10.48% of portfolio value over 90 days.

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

Kimberly Clark de Mxico  vs.  El Puerto de

Kimberly Clark de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kimberly Clark de Mxico 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 fundamental drivers 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.

El Puerto de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days El Puerto de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Kimberly Clark and El Puerto

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

The idea behind Kimberly Clark de Mxico and El Puerto de 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.