Correlation Between Philip Morris and Kibush Capital

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

Diversification Opportunities for Philip Morris and Kibush Capital

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between Philip and Kibush is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and Kibush Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kibush Capital Corp and Philip Morris 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 Philip Morris International are associated (or correlated) with Kibush Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kibush Capital Corp has no effect on the direction of Philip Morris i.e., Philip Morris and Kibush Capital go up and down completely randomly.

Pair Corralation between Philip Morris and Kibush Capital

Allowing for the 90-day total investment horizon Philip Morris is expected to generate 5.43 times less return on investment than Kibush Capital. But when comparing it to its historical volatility, Philip Morris International is 20.96 times less risky than Kibush Capital. It trades about 0.37 of its potential returns per unit of risk. Kibush Capital Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Kibush Capital Corp on September 9, 2022 and sell it today you would earn a total of  0.00  from holding Kibush Capital Corp or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Philip Morris International  vs.  Kibush Capital Corp

 Performance (%) 
       Timeline  
Philip Morris Intern 
Philip Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Philip Morris International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Philip Morris may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Philip Price Channel

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

Philip Morris and Kibush Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Philip Morris and Kibush Capital

The main advantage of trading using opposite Philip Morris and Kibush Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris position performs unexpectedly, Kibush Capital 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 Kibush Capital will offset losses from the drop in Kibush Capital's long position.
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The idea behind Philip Morris International and Kibush Capital Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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