Correlation Between Kibush Capital and Eastman Chemical

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Can any of the company-specific risk be diversified away by investing in both Kibush Capital and Eastman Chemical 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 Eastman Chemical 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 Eastman Chemical, you can compare the effects of market volatilities on Kibush Capital and Eastman Chemical 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 Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kibush Capital and Eastman Chemical.

Diversification Opportunities for Kibush Capital and Eastman Chemical

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Kibush and Eastman is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Kibush Capital Corp and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical 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 Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of Kibush Capital i.e., Kibush Capital and Eastman Chemical go up and down completely randomly.

Pair Corralation between Kibush Capital and Eastman Chemical

Given the investment horizon of 90 days Kibush Capital is expected to generate 1.36 times less return on investment than Eastman Chemical. In addition to that, Kibush Capital is 10.02 times more volatile than Eastman Chemical. It trades about 0.02 of its total potential returns per unit of risk. Eastman Chemical is currently generating about 0.25 per unit of volatility. If you would invest  7,598  in Eastman Chemical on September 3, 2022 and sell it today you would earn a total of  1,154  from holding Eastman Chemical or generate 15.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy90.91%
ValuesDaily Returns

Kibush Capital Corp  vs.  Eastman Chemical

 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 conflicting fundamental indicators, Kibush Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Kibush Price Channel

Eastman Chemical 
Eastman Performance
0 of 100
Over the last 90 days Eastman Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Eastman Chemical is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Eastman Price Channel

Kibush Capital and Eastman Chemical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kibush Capital and Eastman Chemical

The main advantage of trading using opposite Kibush Capital and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kibush Capital position performs unexpectedly, Eastman Chemical 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.
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The idea behind Kibush Capital Corp and Eastman Chemical 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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