Correlation Between Kerur Holdings and Nextferm Technologies
Can any of the company-specific risk be diversified away by investing in both Kerur Holdings and Nextferm Technologies 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 Kerur Holdings and Nextferm Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kerur Holdings and Nextferm Technologies, you can compare the effects of market volatilities on Kerur Holdings and Nextferm Technologies 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 Kerur Holdings with a short position of Nextferm Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kerur Holdings and Nextferm Technologies.
Diversification Opportunities for Kerur Holdings and Nextferm Technologies
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kerur and Nextferm is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kerur Holdings and Nextferm Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextferm Technologies and Kerur Holdings 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 Kerur Holdings are associated (or correlated) with Nextferm Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextferm Technologies has no effect on the direction of Kerur Holdings i.e., Kerur Holdings and Nextferm Technologies go up and down completely randomly.
Pair Corralation between Kerur Holdings and Nextferm Technologies
Assuming the 90 days trading horizon Kerur Holdings is expected to generate 0.08 times more return on investment than Nextferm Technologies. However, Kerur Holdings is 12.52 times less risky than Nextferm Technologies. It trades about 0.24 of its potential returns per unit of risk. Nextferm Technologies is currently generating about -0.19 per unit of risk. If you would invest 669,800 in Kerur Holdings on August 25, 2024 and sell it today you would earn a total of 39,900 from holding Kerur Holdings or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kerur Holdings vs. Nextferm Technologies
Performance |
| Timeline |
| Kerur Holdings |
| Nextferm Technologies |
Kerur Holdings and Nextferm Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kerur Holdings and Nextferm Technologies
The main advantage of trading using opposite Kerur Holdings and Nextferm Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kerur Holdings position performs unexpectedly, Nextferm Technologies 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 Nextferm Technologies will offset losses from the drop in Nextferm Technologies' long position.The idea behind Kerur Holdings and Nextferm Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nextferm Technologies vs. Strauss Group | Nextferm Technologies vs. Neto Malinda | Nextferm Technologies vs. Willy Food | Nextferm Technologies vs. Zanlakol |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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