Correlation Between Kronos Worldwide and Perimeter Solutions

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

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

Diversification Opportunities for Kronos Worldwide and Perimeter Solutions

0.7

Correlation Coefficient

Kronos Worldwide  Perimeter Solutions

Poor diversification

The 3 months correlation between Kronos and Perimeter is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Worldwide and Perimeter Solutions SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perimeter Solutions and Kronos Worldwide 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 Kronos Worldwide are associated (or correlated) with Perimeter Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perimeter Solutions has no effect on the direction of Kronos Worldwide i.e., Kronos Worldwide and Perimeter Solutions go up and down completely randomly.

Pair Corralation between Kronos Worldwide and Perimeter Solutions

Considering the 90-day investment horizon Kronos Worldwide is expected to generate 6.12 times less return on investment than Perimeter Solutions. But when comparing it to its historical volatility, Kronos Worldwide is 1.07 times less risky than Perimeter Solutions. It trades about 0.02 of its potential returns per unit of risk. Perimeter Solutions SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,050  in Perimeter Solutions SA on August 20, 2024 and sell it today you would earn a total of  166.00  from holding Perimeter Solutions SA or generate 15.81% return on investment over 90 days.

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

Kronos Worldwide  vs.  Perimeter Solutions SA

Kronos Worldwide

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kronos Worldwide are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Kronos Worldwide is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Perimeter Solutions

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perimeter Solutions SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Perimeter Solutions displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kronos Worldwide and Perimeter Solutions

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

The idea behind Kronos Worldwide and Perimeter Solutions SA 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.