Correlation Between KIN and Embecta Corp

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

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

Diversification Opportunities for KIN and Embecta Corp

0.31

Correlation Coefficient

KIN  Embecta Corp

Weak diversification

The 3 months correlation between KIN and Embecta is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding KIN and Embecta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embecta Corp and KIN 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 KIN are associated (or correlated) with Embecta Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embecta Corp has no effect on the direction of KIN i.e., KIN and Embecta Corp go up and down completely randomly.

Pair Corralation between KIN and Embecta Corp

Assuming the 90 days trading horizon KIN is expected to under-perform the Embecta Corp. In addition to that, KIN is 1.38 times more volatile than Embecta Corp. It trades about -0.01 of its total potential returns per unit of risk. Embecta Corp is currently generating about 0.22 per unit of volatility. If you would invest  1,329  in Embecta Corp on September 3, 2024 and sell it today you would earn a total of  754.00  from holding Embecta Corp or generate 56.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.67%
Values	Daily Returns

KIN  vs.  Embecta Corp

KIN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KIN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for KIN shareholders.

Embecta Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Embecta Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental drivers, Embecta Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KIN and Embecta Corp

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

The idea behind KIN and Embecta Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.