Correlation Between KMD and RENBTC

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

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

Diversification Opportunities for KMD and RENBTC

0.0

Correlation Coefficient

KMD  RENBTC

Pay attention - limited upside

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

Pair Corralation between KMD and RENBTC

If you would invest  25.00  in KMD on January 26, 2024 and sell it today you would earn a total of  18.00  from holding KMD or generate 72.0% return on investment over 90 days.

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

KMD  vs.  RENBTC

KMD

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KMD are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, KMD exhibited solid returns over the last few months and may actually be approaching a breakup point.

RENBTC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with KMD and RENBTC

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

The idea behind KMD and RENBTC 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.