Correlation Between Munic SA and Kalray SA
Can any of the company-specific risk be diversified away by investing in both Munic SA and Kalray 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 Munic SA and Kalray SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Munic SA and Kalray SA, you can compare the effects of market volatilities on Munic SA and Kalray 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 Munic SA with a short position of Kalray SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Munic SA and Kalray SA.
Diversification Opportunities for Munic SA and Kalray SA
Excellent diversification
The 3 months correlation between Munic and Kalray is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Munic SA and Kalray SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalray SA and Munic 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 Munic SA are associated (or correlated) with Kalray SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalray SA has no effect on the direction of Munic SA i.e., Munic SA and Kalray SA go up and down completely randomly.
Pair Corralation between Munic SA and Kalray SA
Assuming the 90 days trading horizon Munic SA is expected to generate 0.48 times more return on investment than Kalray SA. However, Munic SA is 2.1 times less risky than Kalray SA. It trades about 0.16 of its potential returns per unit of risk. Kalray SA is currently generating about -0.04 per unit of risk. If you would invest 45.00 in Munic SA on September 3, 2024 and sell it today you would earn a total of 47.00 from holding Munic SA or generate 104.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Munic SA vs. Kalray SA
Performance |
| Timeline |
| Munic SA |
| Kalray SA |
Munic SA and Kalray SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Munic SA and Kalray SA
The main advantage of trading using opposite Munic SA and Kalray SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Munic SA position performs unexpectedly, Kalray 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 Kalray SA will offset losses from the drop in Kalray SA's long position.The idea behind Munic SA and Kalray 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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