Correlation Between MT 1997 and KARO INVEST
Can any of the company-specific risk be diversified away by investing in both MT 1997 and KARO INVEST 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 MT 1997 and KARO INVEST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MT 1997 AS and KARO INVEST as, you can compare the effects of market volatilities on MT 1997 and KARO INVEST 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 MT 1997 with a short position of KARO INVEST. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT 1997 and KARO INVEST.
Diversification Opportunities for MT 1997 and KARO INVEST
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KLIKY and KARO is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding MT 1997 AS and KARO INVEST as in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KARO INVEST as and MT 1997 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 MT 1997 AS are associated (or correlated) with KARO INVEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KARO INVEST as has no effect on the direction of MT 1997 i.e., MT 1997 and KARO INVEST go up and down completely randomly.
Pair Corralation between MT 1997 and KARO INVEST
Assuming the 90 days trading horizon MT 1997 AS is expected to under-perform the KARO INVEST. But the stock apears to be less risky and, when comparing its historical volatility, MT 1997 AS is 2.37 times less risky than KARO INVEST. The stock trades about -0.23 of its potential returns per unit of risk. The KARO INVEST as is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 14,500 in KARO INVEST as on August 30, 2024 and sell it today you would lose (300.00) from holding KARO INVEST as or give up 2.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
MT 1997 AS vs. KARO INVEST as
Performance |
| Timeline |
| MT 1997 AS |
| KARO INVEST as |
MT 1997 and KARO INVEST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MT 1997 and KARO INVEST
The main advantage of trading using opposite MT 1997 and KARO INVEST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT 1997 position performs unexpectedly, KARO INVEST 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 KARO INVEST will offset losses from the drop in KARO INVEST's long position.| MT 1997 vs. Volkswagen AG | MT 1997 vs. Philip Morris CR | MT 1997 vs. Prabos Plus as | MT 1997 vs. Nokia Oyj |
| KARO INVEST vs. UNIQA Insurance Group | KARO INVEST vs. Vienna Insurance Group | KARO INVEST vs. JT ARCH INVESTMENTS |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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