Correlation Between Electro Ao and Karsten SA
Can any of the company-specific risk be diversified away by investing in both Electro Ao 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 Electro Ao and Karsten SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electro Ao Altona and Karsten SA, you can compare the effects of market volatilities on Electro Ao 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 Electro Ao with a short position of Karsten SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electro Ao and Karsten SA.
Diversification Opportunities for Electro Ao and Karsten SA
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Electro and Karsten is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Electro Ao Altona and Karsten SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karsten SA and Electro Ao 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 Electro Ao Altona 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 Electro Ao i.e., Electro Ao and Karsten SA go up and down completely randomly.
Pair Corralation between Electro Ao and Karsten SA
Assuming the 90 days trading horizon Electro Ao is expected to generate 1.65 times less return on investment than Karsten SA. But when comparing it to its historical volatility, Electro Ao Altona is 1.33 times less risky than Karsten SA. It trades about 0.05 of its potential returns per unit of risk. Karsten SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,700 in Karsten SA on September 14, 2024 and sell it today you would earn a total of 500.00 from holding Karsten SA or generate 29.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electro Ao Altona vs. Karsten SA
Performance |
| Timeline |
| Electro Ao Altona |
| Karsten SA |
Electro Ao and Karsten SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electro Ao and Karsten SA
The main advantage of trading using opposite Electro Ao and Karsten SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electro Ao 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.| Electro Ao vs. Electronic Arts | Electro Ao vs. Cognizant Technology Solutions | Electro Ao vs. United Airlines Holdings | Electro Ao vs. Align Technology |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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