Correlation Between Barnes and Kerry Properties

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

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

Diversification Opportunities for Barnes and Kerry Properties

-0.08

Correlation Coefficient

Barnes  Kerry Properties

Good diversification

The 3 months correlation between Barnes and Kerry is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Kerry Properties Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kerry Properties and Barnes 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 Barnes Group are associated (or correlated) with Kerry Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kerry Properties has no effect on the direction of Barnes i.e., Barnes and Kerry Properties go up and down completely randomly.

Pair Corralation between Barnes and Kerry Properties

Taking into account the 90-day investment horizon Barnes is expected to generate 8.8 times less return on investment than Kerry Properties. In addition to that, Barnes is 3.11 times more volatile than Kerry Properties Ltd. It trades about 0.01 of its total potential returns per unit of risk. Kerry Properties Ltd is currently generating about 0.32 per unit of volatility. If you would invest  875.00  in Kerry Properties Ltd on January 26, 2024 and sell it today you would earn a total of  49.00  from holding Kerry Properties Ltd or generate 5.6% return on investment over 90 days.

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

Barnes Group  vs.  Kerry Properties Ltd

Barnes Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barnes Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental drivers, Barnes sustained solid returns over the last few months and may actually be approaching a breakup point.

Kerry Properties

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kerry Properties Ltd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Kerry Properties may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Barnes and Kerry Properties

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

The idea behind Barnes Group and Kerry Properties Ltd 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..