Correlation Between K W and Leo Global

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

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

Diversification Opportunities for K W and Leo Global

0.2

Correlation Coefficient

K W  Leo Global

Modest diversification

The 3 months correlation between KWM and Leo is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding K W Metal and Leo Global Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leo Global Logistics and K W 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 K W Metal are associated (or correlated) with Leo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leo Global Logistics has no effect on the direction of K W i.e., K W and Leo Global go up and down completely randomly.

Pair Corralation between K W and Leo Global

Assuming the 90 days trading horizon K W Metal is expected to generate 19.64 times more return on investment than Leo Global. However, K W is 19.64 times more volatile than Leo Global Logistics. It trades about 0.04 of its potential returns per unit of risk. Leo Global Logistics is currently generating about -0.09 per unit of risk. If you would invest  238.00  in K W Metal on September 3, 2024 and sell it today you would lose (111.00) from holding K W Metal or give up 46.64% of portfolio value over 90 days.

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

K W Metal  vs.  Leo Global Logistics

K W Metal

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in K W Metal are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak primary indicators, K W disclosed solid returns over the last few months and may actually be approaching a breakup point.

Leo Global Logistics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leo Global Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with K W and Leo Global

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

The idea behind K W Metal and Leo Global Logistics 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.