Correlation Between Kalray SA and Nacon Sa
Can any of the company-specific risk be diversified away by investing in both Kalray SA and Nacon Sa 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 Kalray SA and Nacon Sa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kalray SA and Nacon Sa, you can compare the effects of market volatilities on Kalray SA and Nacon Sa 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 Kalray SA with a short position of Nacon Sa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kalray SA and Nacon Sa.
Diversification Opportunities for Kalray SA and Nacon Sa
Very poor diversification
The 3 months correlation between Kalray and Nacon is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Kalray SA and Nacon Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nacon Sa and Kalray SA 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 Kalray SA are associated (or correlated) with Nacon Sa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nacon Sa has no effect on the direction of Kalray SA i.e., Kalray SA and Nacon Sa go up and down completely randomly.
Pair Corralation between Kalray SA and Nacon Sa
Assuming the 90 days trading horizon Kalray SA is expected to under-perform the Nacon Sa. In addition to that, Kalray SA is 3.25 times more volatile than Nacon Sa. It trades about -0.07 of its total potential returns per unit of risk. Nacon Sa is currently generating about -0.13 per unit of volatility. If you would invest 148.00 in Nacon Sa on September 2, 2024 and sell it today you would lose (98.00) from holding Nacon Sa or give up 66.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kalray SA vs. Nacon Sa
Performance |
| Timeline |
| Kalray SA |
| Nacon Sa |
Kalray SA and Nacon Sa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kalray SA and Nacon Sa
The main advantage of trading using opposite Kalray SA and Nacon Sa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kalray SA position performs unexpectedly, Nacon Sa 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 Nacon Sa will offset losses from the drop in Nacon Sa's long position.The idea behind Kalray SA and Nacon Sa 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.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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