Correlation Between Kibush Capital and Archrock

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Can any of the company-specific risk be diversified away by investing in both Kibush Capital and Archrock 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 Kibush Capital and Archrock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kibush Capital Corp and Archrock, you can compare the effects of market volatilities on Kibush Capital and Archrock 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 Kibush Capital with a short position of Archrock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kibush Capital and Archrock.

Diversification Opportunities for Kibush Capital and Archrock

-0.33
  Correlation Coefficient

Very good diversification

The 3 months correlation between Kibush and Archrock is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Kibush Capital Corp and Archrock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archrock and Kibush Capital 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 Kibush Capital Corp are associated (or correlated) with Archrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archrock has no effect on the direction of Kibush Capital i.e., Kibush Capital and Archrock go up and down completely randomly.

Pair Corralation between Kibush Capital and Archrock

Given the investment horizon of 90 days Kibush Capital is expected to generate 1.54 times less return on investment than Archrock. In addition to that, Kibush Capital is 6.03 times more volatile than Archrock. It trades about 0.01 of its total potential returns per unit of risk. Archrock is currently generating about 0.05 per unit of volatility. If you would invest  709.00  in Archrock on September 4, 2022 and sell it today you would earn a total of  182.00  from holding Archrock or generate 25.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.8%
ValuesDaily Returns

Kibush Capital Corp  vs.  Archrock

 Performance (%) 
       Timeline  
Kibush Capital Corp 
Kibush Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Kibush Capital Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Kibush Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Kibush Price Channel

Archrock 
Archrock Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Archrock are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Archrock sustained solid returns over the last few months and may actually be approaching a breakup point.

Archrock Price Channel

Kibush Capital and Archrock Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kibush Capital and Archrock

The main advantage of trading using opposite Kibush Capital and Archrock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kibush Capital position performs unexpectedly, Archrock 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 Archrock will offset losses from the drop in Archrock's long position.
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The idea behind Kibush Capital Corp and Archrock 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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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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