Correlation Between Kingfisher PLC and Honest

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

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

Diversification Opportunities for Kingfisher PLC and Honest

0.63

Correlation Coefficient

Kingfisher PLC  Honest

Poor diversification

The 3 months correlation between Kingfisher and Honest is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kingfisher PLC ADR and Honest Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honest Company and Kingfisher PLC 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 Kingfisher PLC ADR are associated (or correlated) with Honest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honest Company has no effect on the direction of Kingfisher PLC i.e., Kingfisher PLC and Honest go up and down completely randomly.

Pair Corralation between Kingfisher PLC and Honest

Assuming the 90 days horizon Kingfisher PLC ADR is expected to under-perform the Honest. But the otc stock apears to be less risky and, when comparing its historical volatility, Kingfisher PLC ADR is 2.25 times less risky than Honest. The otc stock trades about -0.06 of its potential returns per unit of risk. The Honest Company is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  496.00  in Honest Company on May 6, 2025 and sell it today you would lose (17.00) from holding Honest Company or give up 3.43% of portfolio value over 90 days.

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

Kingfisher PLC ADR  vs.  Honest Company

Kingfisher PLC ADR

Risk-Adjusted Performance

Very Weak

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

Honest Company

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Kingfisher PLC and Honest

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

The idea behind Kingfisher PLC ADR and Honest Company 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.