Correlation Between Basic Materials and Karsten SA
Can any of the company-specific risk be diversified away by investing in both Basic Materials 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 Basic Materials and Karsten SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Materials and Karsten SA, you can compare the effects of market volatilities on Basic Materials 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 Basic Materials with a short position of Karsten SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Materials and Karsten SA.
Diversification Opportunities for Basic Materials and Karsten SA
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Basic and Karsten is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials and Karsten SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karsten SA and Basic Materials 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 Basic Materials 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 Basic Materials i.e., Basic Materials and Karsten SA go up and down completely randomly.
Pair Corralation between Basic Materials and Karsten SA
Assuming the 90 days trading horizon Basic Materials is expected to under-perform the Karsten SA. But the index apears to be less risky and, when comparing its historical volatility, Basic Materials is 4.64 times less risky than Karsten SA. The index trades about -0.14 of its potential returns per unit of risk. The Karsten SA is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 2,145 in Karsten SA on November 28, 2024 and sell it today you would earn a total of 1,264 from holding Karsten SA or generate 58.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Basic Materials vs. Karsten SA
Performance |
| Timeline |
Basic Materials and Karsten SA Volatility Contrast
Predicted Return Density |
| Returns |
Basic Materials
Pair trading matchups for Basic Materials
Karsten SA
Pair trading matchups for Karsten SA
Pair Trading with Basic Materials and Karsten SA
The main advantage of trading using opposite Basic Materials and Karsten SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Materials 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.| Basic Materials vs. United States Steel | Basic Materials vs. Monster Beverage | Basic Materials vs. Liberty Broadband | Basic Materials vs. Molson Coors Beverage |
| Karsten SA vs. Costco Wholesale | Karsten SA vs. Multilaser Industrial SA | Karsten SA vs. Tres Tentos Agroindustrial | Karsten SA vs. METISA Metalrgica Timboense |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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