Correlation Between KFT and Hello Pal

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

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

Diversification Opportunities for KFT and Hello Pal

0.0

Correlation Coefficient

KFT  Hello Pal

Pay attention - limited upside

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

Pair Corralation between KFT and Hello Pal

If you would invest  0.40  in Hello Pal International on February 7, 2024 and sell it today you would lose (0.30) from holding Hello Pal International or give up 75.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

KFT  vs.  Hello Pal International

KFT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KFT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, KFT is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Hello Pal International

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hello Pal International are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Hello Pal reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KFT and Hello Pal

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

The idea behind KFT and Hello Pal International 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.