Correlation Between Kibush Capital and Nike

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

Diversification Opportunities for Kibush Capital and Nike

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Kibush and Nike is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Kibush Capital Corp and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Kibush Capital i.e., Kibush Capital and Nike go up and down completely randomly.

Pair Corralation between Kibush Capital and Nike

Given the investment horizon of 90 days Kibush Capital is expected to generate 1.27 times less return on investment than Nike. In addition to that, Kibush Capital is 9.14 times more volatile than Nike Inc. It trades about 0.02 of its total potential returns per unit of risk. Nike Inc is currently generating about 0.21 per unit of volatility. If you would invest  9,268  in Nike Inc on August 30, 2022 and sell it today you would earn a total of  1,228  from holding Nike Inc or generate 13.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

Kibush Capital Corp  vs.  Nike Inc

 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

Nike Inc 
Nike Performance
0 of 100
Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Nike is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Nike Price Channel

Kibush Capital and Nike Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kibush Capital and Nike

The main advantage of trading using opposite Kibush Capital and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kibush Capital position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike's long position.
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The idea behind Kibush Capital Corp and Nike Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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