Correlation Between Compagnie and Keyware Technologies
Can any of the company-specific risk be diversified away by investing in both Compagnie and Keyware Technologies 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 Compagnie and Keyware Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie du Bois and Keyware Technologies NV, you can compare the effects of market volatilities on Compagnie and Keyware Technologies 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 Compagnie with a short position of Keyware Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Keyware Technologies.
Diversification Opportunities for Compagnie and Keyware Technologies
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Compagnie and Keyware is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie du Bois and Keyware Technologies NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyware Technologies and Compagnie 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 Compagnie du Bois are associated (or correlated) with Keyware Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyware Technologies has no effect on the direction of Compagnie i.e., Compagnie and Keyware Technologies go up and down completely randomly.
Pair Corralation between Compagnie and Keyware Technologies
Assuming the 90 days trading horizon Compagnie du Bois is expected to under-perform the Keyware Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Compagnie du Bois is 1.95 times less risky than Keyware Technologies. The stock trades about -0.06 of its potential returns per unit of risk. The Keyware Technologies NV is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 92.00 in Keyware Technologies NV on September 1, 2024 and sell it today you would lose (13.00) from holding Keyware Technologies NV or give up 14.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie du Bois vs. Keyware Technologies NV
Performance |
| Timeline |
| Compagnie du Bois |
| Keyware Technologies |
Compagnie and Keyware Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie and Keyware Technologies
The main advantage of trading using opposite Compagnie and Keyware Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie position performs unexpectedly, Keyware Technologies 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 Keyware Technologies will offset losses from the drop in Keyware Technologies' long position.| Compagnie vs. Brederode SA | Compagnie vs. GIMV NV | Compagnie vs. Ackermans Van Haaren | Compagnie vs. Groep Brussel Lambert |
| Keyware Technologies vs. Crescent NV | Keyware Technologies vs. Ion Beam Applications | Keyware Technologies vs. Nyrstar NV | Keyware Technologies vs. AGFA Gevaert NV |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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