Correlation Between KINGBOARD CHEMICAL and SEI INVESTMENTS

Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL and SEI INVESTMENTS 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 KINGBOARD CHEMICAL and SEI INVESTMENTS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KINGBOARD CHEMICAL and SEI INVESTMENTS, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and SEI INVESTMENTS 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 KINGBOARD CHEMICAL with a short position of SEI INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and SEI INVESTMENTS.

Diversification Opportunities for KINGBOARD CHEMICAL and SEI INVESTMENTS

0.68

Correlation Coefficient

KINGBOARD CHEMICAL  SEI INVESTMENTS

Poor diversification

The 3 months correlation between KINGBOARD and SEI is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and SEI INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI INVESTMENTS and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL are associated (or correlated) with SEI INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI INVESTMENTS has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and SEI INVESTMENTS go up and down completely randomly.

Pair Corralation between KINGBOARD CHEMICAL and SEI INVESTMENTS

Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 2.99 times more return on investment than SEI INVESTMENTS. However, KINGBOARD CHEMICAL is 2.99 times more volatile than SEI INVESTMENTS. It trades about 0.18 of its potential returns per unit of risk. SEI INVESTMENTS is currently generating about 0.2 per unit of risk. If you would invest  198.00  in KINGBOARD CHEMICAL on April 25, 2025 and sell it today you would earn a total of  80.00  from holding KINGBOARD CHEMICAL or generate 40.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

KINGBOARD CHEMICAL  vs.  SEI INVESTMENTS

KINGBOARD CHEMICAL

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KINGBOARD CHEMICAL are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, KINGBOARD CHEMICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

SEI INVESTMENTS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SEI INVESTMENTS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SEI INVESTMENTS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KINGBOARD CHEMICAL and SEI INVESTMENTS

The main advantage of trading using opposite KINGBOARD CHEMICAL and SEI INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL position performs unexpectedly, SEI INVESTMENTS 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 SEI INVESTMENTS will offset losses from the drop in SEI INVESTMENTS's long position.

The idea behind KINGBOARD CHEMICAL and SEI INVESTMENTS 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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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 the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.