Correlation Between KCI SA and Tower Investments
Can any of the company-specific risk be diversified away by investing in both KCI SA and Tower Investments 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 KCI SA and Tower Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KCI SA and Tower Investments SA, you can compare the effects of market volatilities on KCI SA and Tower Investments 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 KCI SA with a short position of Tower Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of KCI SA and Tower Investments.
Diversification Opportunities for KCI SA and Tower Investments
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KCI and Tower is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding KCI SA and Tower Investments SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Investments and KCI 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 KCI SA are associated (or correlated) with Tower Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Investments has no effect on the direction of KCI SA i.e., KCI SA and Tower Investments go up and down completely randomly.
Pair Corralation between KCI SA and Tower Investments
Assuming the 90 days trading horizon KCI SA is expected to under-perform the Tower Investments. But the stock apears to be less risky and, when comparing its historical volatility, KCI SA is 3.51 times less risky than Tower Investments. The stock trades about -0.06 of its potential returns per unit of risk. The Tower Investments SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 268.00 in Tower Investments SA on August 26, 2024 and sell it today you would lose (2.00) from holding Tower Investments SA or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KCI SA vs. Tower Investments SA
Performance |
| Timeline |
| KCI SA |
| Tower Investments |
KCI SA and Tower Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KCI SA and Tower Investments
The main advantage of trading using opposite KCI SA and Tower Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KCI SA position performs unexpectedly, Tower Investments 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 Tower Investments will offset losses from the drop in Tower Investments' long position.| KCI SA vs. Tower Investments SA | KCI SA vs. Asseco Business Solutions | KCI SA vs. Detalion Games SA | KCI SA vs. Asseco South Eastern |
| Tower Investments vs. Asseco Business Solutions | Tower Investments vs. Detalion Games SA | Tower Investments vs. Asseco South Eastern | Tower Investments vs. Movie Games 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Stocks Directory Find actively traded stocks across global markets | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |