Correlation Between Kontoor Brands and Space-Communication

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

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

Diversification Opportunities for Kontoor Brands and Space-Communication

0.0

Correlation Coefficient

Kontoor Brands  Space-Communication

Pay attention - limited upside

The 3 months correlation between Kontoor and Space-Communication is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kontoor Brands and Space Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Space Communication 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 Space-Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Space Communication has no effect on the direction of Kontoor Brands i.e., Kontoor Brands and Space-Communication go up and down completely randomly.

Pair Corralation between Kontoor Brands and Space-Communication

If you would invest  7,287  in Kontoor Brands on September 3, 2024 and sell it today you would earn a total of  1,891  from holding Kontoor Brands or generate 25.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Kontoor Brands  vs.  Space Communication

Kontoor Brands

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kontoor Brands are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Kontoor Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Space Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Space Communication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Space-Communication is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kontoor Brands and Space-Communication

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

The idea behind Kontoor Brands and Space Communication 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.