Correlation Between Kuraray and Black Swan

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

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

Diversification Opportunities for Kuraray and Black Swan

0.2

Correlation Coefficient

Kuraray  Black Swan

Modest diversification

The 3 months correlation between Kuraray and Black is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Kuraray Co and Black Swan Graphene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Swan Graphene and Kuraray 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 Kuraray Co are associated (or correlated) with Black Swan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Swan Graphene has no effect on the direction of Kuraray i.e., Kuraray and Black Swan go up and down completely randomly.

Pair Corralation between Kuraray and Black Swan

Assuming the 90 days horizon Kuraray Co is expected to generate 0.55 times more return on investment than Black Swan. However, Kuraray Co is 1.8 times less risky than Black Swan. It trades about 0.01 of its potential returns per unit of risk. Black Swan Graphene is currently generating about -0.03 per unit of risk. If you would invest  4,480  in Kuraray Co on September 20, 2024 and sell it today you would lose (30.00) from holding Kuraray Co or give up 0.67% of portfolio value over 90 days.

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

Kuraray Co  vs.  Black Swan Graphene

Kuraray

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kuraray Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Kuraray is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Black Swan Graphene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Swan Graphene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Kuraray and Black Swan

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

The idea behind Kuraray Co and Black Swan Graphene 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.