Correlation Between Companhia Tecidos and Karsten SA
Can any of the company-specific risk be diversified away by investing in both Companhia Tecidos 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 Companhia Tecidos and Karsten SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Tecidos Santanense and Karsten SA, you can compare the effects of market volatilities on Companhia Tecidos 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 Companhia Tecidos with a short position of Karsten SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Tecidos and Karsten SA.
Diversification Opportunities for Companhia Tecidos and Karsten SA
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Companhia and Karsten is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Tecidos Santanense and Karsten SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karsten SA and Companhia Tecidos 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 Companhia Tecidos Santanense 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 Companhia Tecidos i.e., Companhia Tecidos and Karsten SA go up and down completely randomly.
Pair Corralation between Companhia Tecidos and Karsten SA
Assuming the 90 days trading horizon Companhia Tecidos Santanense is expected to under-perform the Karsten SA. But the stock apears to be less risky and, when comparing its historical volatility, Companhia Tecidos Santanense is 1.25 times less risky than Karsten SA. The stock trades about -0.17 of its potential returns per unit of risk. The Karsten SA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,150 in Karsten SA on November 8, 2024 and sell it today you would earn a total of 247.00 from holding Karsten SA or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Tecidos Santanense vs. Karsten SA
Performance |
| Timeline |
| Companhia Tecidos |
| Karsten SA |
Companhia Tecidos and Karsten SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Tecidos and Karsten SA
The main advantage of trading using opposite Companhia Tecidos and Karsten SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Tecidos 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.| Companhia Tecidos vs. Companhia Tecidos Santanense | Companhia Tecidos vs. Companhia de Tecidos | Companhia Tecidos vs. Pettenati SA Industria | Companhia Tecidos vs. Dhler SA |
| Karsten SA vs. Companhia de Tecidos | Karsten SA vs. Pettenati SA Industria | Karsten SA vs. Companhia Tecidos Santanense | Karsten SA vs. Dhler 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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