Correlation Between Kontoor Brands and SunHydrogen

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

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

Diversification Opportunities for Kontoor Brands and SunHydrogen

-0.63

Correlation Coefficient

Kontoor Brands  SunHydrogen

Excellent diversification

The 3 months correlation between Kontoor and SunHydrogen is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kontoor Brands and SunHydrogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunHydrogen and Kontoor 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 Kontoor Brands are associated (or correlated) with SunHydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunHydrogen has no effect on the direction of Kontoor Brands i.e., Kontoor Brands and SunHydrogen go up and down completely randomly.

Pair Corralation between Kontoor Brands and SunHydrogen

Considering the 90-day investment horizon Kontoor Brands is expected to generate 0.4 times more return on investment than SunHydrogen. However, Kontoor Brands is 2.53 times less risky than SunHydrogen. It trades about 0.15 of its potential returns per unit of risk. SunHydrogen is currently generating about -0.01 per unit of risk. If you would invest  7,245  in Kontoor Brands on September 12, 2024 and sell it today you would earn a total of  1,598  from holding Kontoor Brands or generate 22.06% return on investment over 90 days.

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

Kontoor Brands  vs.  SunHydrogen

Kontoor Brands

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kontoor Brands are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Kontoor Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

SunHydrogen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SunHydrogen has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SunHydrogen is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Kontoor Brands and SunHydrogen

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

The idea behind Kontoor Brands and SunHydrogen 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.