Correlation Between K Bro and Aimia
Can any of the company-specific risk be diversified away by investing in both K Bro and Aimia 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 K Bro and Aimia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K Bro Linen and Aimia Inc, you can compare the effects of market volatilities on K Bro and Aimia 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 K Bro with a short position of Aimia. Check out your portfolio center. Please also check ongoing floating volatility patterns of K Bro and Aimia.
Diversification Opportunities for K Bro and Aimia
Excellent diversification
The 3 months correlation between KBL and Aimia is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding K Bro Linen and Aimia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aimia Inc and K Bro 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 K Bro Linen are associated (or correlated) with Aimia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aimia Inc has no effect on the direction of K Bro i.e., K Bro and Aimia go up and down completely randomly.
Pair Corralation between K Bro and Aimia
Assuming the 90 days trading horizon K Bro Linen is expected to generate 0.73 times more return on investment than Aimia. However, K Bro Linen is 1.38 times less risky than Aimia. It trades about 0.09 of its potential returns per unit of risk. Aimia Inc is currently generating about -0.27 per unit of risk. If you would invest 3,380 in K Bro Linen on January 25, 2024 and sell it today you would earn a total of 95.00 from holding K Bro Linen or generate 2.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
K Bro Linen vs. Aimia Inc
Performance |
| Timeline |
| K Bro Linen |
| Aimia Inc |
K Bro and Aimia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K Bro and Aimia
The main advantage of trading using opposite K Bro and Aimia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K Bro position performs unexpectedly, Aimia 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 Aimia will offset losses from the drop in Aimia's long position.| K Bro vs. Richards Packaging Income | K Bro vs. Ag Growth International | K Bro vs. Information Services | K Bro vs. Pollard Banknote Limited |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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