Correlation Between KAUFMAN ET and Transportadora
Can any of the company-specific risk be diversified away by investing in both KAUFMAN ET and Transportadora 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 KAUFMAN ET and Transportadora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAUFMAN ET BROAD and Transportadora de Gas, you can compare the effects of market volatilities on KAUFMAN ET and Transportadora 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 KAUFMAN ET with a short position of Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and Transportadora.
Diversification Opportunities for KAUFMAN ET and Transportadora
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KAUFMAN and Transportadora is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas and KAUFMAN ET 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 KAUFMAN ET BROAD are associated (or correlated) with Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of KAUFMAN ET i.e., KAUFMAN ET and Transportadora go up and down completely randomly.
Pair Corralation between KAUFMAN ET and Transportadora
Assuming the 90 days trading horizon KAUFMAN ET is expected to generate 4.44 times less return on investment than Transportadora. But when comparing it to its historical volatility, KAUFMAN ET BROAD is 2.16 times less risky than Transportadora. It trades about 0.05 of its potential returns per unit of risk. Transportadora de Gas is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 930.00 in Transportadora de Gas on August 25, 2024 and sell it today you would earn a total of 1,710 from holding Transportadora de Gas or generate 183.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAUFMAN ET BROAD vs. Transportadora de Gas
Performance |
| Timeline |
| KAUFMAN ET BROAD |
| Transportadora de Gas |
KAUFMAN ET and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAUFMAN ET and Transportadora
The main advantage of trading using opposite KAUFMAN ET and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAUFMAN ET position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.The idea behind KAUFMAN ET BROAD and Transportadora de Gas 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.| Transportadora vs. Apple Inc | Transportadora vs. Apple Inc | Transportadora vs. Apple Inc | Transportadora vs. Apple Inc |
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 the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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