Correlation Between Kibush Capital and Newell Brands

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

Diversification Opportunities for Kibush Capital and Newell Brands

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Kibush and Newell is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kibush Capital Corp and Newell Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newell Brands 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 Newell Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newell Brands has no effect on the direction of Kibush Capital i.e., Kibush Capital and Newell Brands go up and down completely randomly.

Pair Corralation between Kibush Capital and Newell Brands

Given the investment horizon of 90 days Kibush Capital Corp is expected to generate 9.05 times more return on investment than Newell Brands. However, Kibush Capital is 9.05 times more volatile than Newell Brands. It trades about 0.02 of its potential returns per unit of risk. Newell Brands is currently generating about -0.01 per unit of risk. If you would invest  0.05  in Kibush Capital Corp on September 2, 2022 and sell it today you would lose (0.02)  from holding Kibush Capital Corp or give up 40.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Kibush Capital Corp  vs.  Newell Brands

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

Kibush Price Channel

Newell Brands 
Newell Performance
0 of 100
Over the last 90 days Newell Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in January 2023. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Newell Price Channel

Kibush Capital and Newell Brands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kibush Capital and Newell Brands

The main advantage of trading using opposite Kibush Capital and Newell Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kibush Capital position performs unexpectedly, Newell Brands 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 Newell Brands will offset losses from the drop in Newell Brands' long position.
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The idea behind Kibush Capital Corp and Newell Brands 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 Price Transformation module to use Price Transformation models to analyze depth of different equity instruments across global markets.

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