Correlation Between Karsten SA and Bombril SA
Can any of the company-specific risk be diversified away by investing in both Karsten SA and Bombril 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 Karsten SA and Bombril SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Karsten SA and Bombril SA, you can compare the effects of market volatilities on Karsten SA and Bombril 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 Karsten SA with a short position of Bombril SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karsten SA and Bombril SA.
Diversification Opportunities for Karsten SA and Bombril SA
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Karsten and Bombril is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Karsten SA and Bombril SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombril SA and Karsten 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 Karsten SA are associated (or correlated) with Bombril SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombril SA has no effect on the direction of Karsten SA i.e., Karsten SA and Bombril SA go up and down completely randomly.
Pair Corralation between Karsten SA and Bombril SA
Assuming the 90 days trading horizon Karsten SA is expected to generate 1.34 times more return on investment than Bombril SA. However, Karsten SA is 1.34 times more volatile than Bombril SA. It trades about 0.07 of its potential returns per unit of risk. Bombril SA is currently generating about -0.4 per unit of risk. If you would invest 1,939 in Karsten SA on September 5, 2024 and sell it today you would earn a total of 73.00 from holding Karsten SA or generate 3.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Karsten SA vs. Bombril SA
Performance |
| Timeline |
| Karsten SA |
| Bombril SA |
Karsten SA and Bombril SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Karsten SA and Bombril SA
The main advantage of trading using opposite Karsten SA and Bombril SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karsten SA position performs unexpectedly, Bombril 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 Bombril SA will offset losses from the drop in Bombril SA's long position.| Karsten SA vs. Schulz SA | Karsten SA vs. Springs Global Participaes | Karsten SA vs. Grazziotin SA | Karsten SA vs. Marcopolo SA |
| Bombril SA vs. Minupar Participaes SA | Bombril SA vs. Grazziotin SA | Bombril SA vs. Banco da Amaznia | Bombril SA vs. Grazziotin 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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