Correlation Between Bombril SA and Karsten SA
Can any of the company-specific risk be diversified away by investing in both Bombril SA and Karsten 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 Bombril SA and Karsten SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bombril SA and Karsten SA, you can compare the effects of market volatilities on Bombril SA and Karsten 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 Bombril SA with a short position of Karsten SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bombril SA and Karsten SA.
Diversification Opportunities for Bombril SA and Karsten SA
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bombril and Karsten is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bombril SA and Karsten SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karsten SA and Bombril 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 Bombril SA are associated (or correlated) with Karsten SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karsten SA has no effect on the direction of Bombril SA i.e., Bombril SA and Karsten SA go up and down completely randomly.
Pair Corralation between Bombril SA and Karsten SA
Assuming the 90 days trading horizon Bombril SA is expected to generate 1.6 times less return on investment than Karsten SA. But when comparing it to its historical volatility, Bombril SA is 1.75 times less risky than Karsten SA. It trades about 0.06 of its potential returns per unit of risk. Karsten SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 961.00 in Karsten SA on September 5, 2024 and sell it today you would earn a total of 1,051 from holding Karsten SA or generate 109.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Bombril SA vs. Karsten SA
Performance |
| Timeline |
| Bombril SA |
| Karsten SA |
Bombril SA and Karsten SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bombril SA and Karsten SA
The main advantage of trading using opposite Bombril SA and Karsten SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bombril SA position performs unexpectedly, Karsten 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 Karsten SA will offset losses from the drop in Karsten SA's long position.| Bombril SA vs. Minupar Participaes SA | Bombril SA vs. Grazziotin SA | Bombril SA vs. Banco da Amaznia | Bombril SA vs. Grazziotin SA |
| Karsten SA vs. Schulz SA | Karsten SA vs. Springs Global Participaes | Karsten SA vs. Grazziotin SA | Karsten SA vs. Marcopolo SA |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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