Correlation Between Karoon Energy and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Karoon Energy and Ebro Foods 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 Karoon Energy and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Karoon Energy and Ebro Foods SA, you can compare the effects of market volatilities on Karoon Energy and Ebro Foods 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 Karoon Energy with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karoon Energy and Ebro Foods.
Diversification Opportunities for Karoon Energy and Ebro Foods
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Karoon and Ebro is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Karoon Energy and Ebro Foods SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods SA and Karoon Energy 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 Karoon Energy are associated (or correlated) with Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods SA has no effect on the direction of Karoon Energy i.e., Karoon Energy and Ebro Foods go up and down completely randomly.
Pair Corralation between Karoon Energy and Ebro Foods
Assuming the 90 days horizon Karoon Energy is expected to generate 2.27 times more return on investment than Ebro Foods. However, Karoon Energy is 2.27 times more volatile than Ebro Foods SA. It trades about 0.03 of its potential returns per unit of risk. Ebro Foods SA is currently generating about -0.14 per unit of risk. If you would invest 82.00 in Karoon Energy on September 4, 2024 and sell it today you would earn a total of 1.00 from holding Karoon Energy or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Karoon Energy vs. Ebro Foods SA
Performance |
| Timeline |
| Karoon Energy |
| Ebro Foods SA |
Karoon Energy and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Karoon Energy and Ebro Foods
The main advantage of trading using opposite Karoon Energy and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karoon Energy position performs unexpectedly, Ebro Foods 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 Ebro Foods will offset losses from the drop in Ebro Foods' long position.| Karoon Energy vs. GALENA MINING LTD | Karoon Energy vs. OFFICE DEPOT | Karoon Energy vs. PKSHA TECHNOLOGY INC | Karoon Energy vs. MTI WIRELESS EDGE |
| Ebro Foods vs. Nestl SA | Ebro Foods vs. Kraft Heinz Co | Ebro Foods vs. General Mills | Ebro Foods vs. Kellogg Company |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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