Correlation Between KRISPY KREME and METAIR INVTS

Can any of the company-specific risk be diversified away by investing in both KRISPY KREME and METAIR INVTS 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 KRISPY KREME and METAIR INVTS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KRISPY KREME DL 01 and METAIR INVTS LTD, you can compare the effects of market volatilities on KRISPY KREME and METAIR INVTS 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 KRISPY KREME with a short position of METAIR INVTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and METAIR INVTS.

Diversification Opportunities for KRISPY KREME and METAIR INVTS

0.06

Correlation Coefficient

KRISPY KREME  METAIR INVTS

Significant diversification

The 3 months correlation between KRISPY and METAIR is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 and METAIR INVTS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METAIR INVTS LTD and KRISPY KREME 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 KRISPY KREME DL 01 are associated (or correlated) with METAIR INVTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METAIR INVTS LTD has no effect on the direction of KRISPY KREME i.e., KRISPY KREME and METAIR INVTS go up and down completely randomly.

Pair Corralation between KRISPY KREME and METAIR INVTS

Assuming the 90 days horizon KRISPY KREME DL 01 is expected to under-perform the METAIR INVTS. But the stock apears to be less risky and, when comparing its historical volatility, KRISPY KREME DL 01 is 2.5 times less risky than METAIR INVTS. The stock trades about -0.35 of its potential returns per unit of risk. The METAIR INVTS LTD is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  54.00  in METAIR INVTS LTD on September 20, 2024 and sell it today you would earn a total of  3.00  from holding METAIR INVTS LTD or generate 5.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

KRISPY KREME DL 01  vs.  METAIR INVTS LTD

KRISPY KREME DL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KRISPY KREME DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

METAIR INVTS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METAIR INVTS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with KRISPY KREME and METAIR INVTS

The main advantage of trading using opposite KRISPY KREME and METAIR INVTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRISPY KREME position performs unexpectedly, METAIR INVTS 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 METAIR INVTS will offset losses from the drop in METAIR INVTS's long position.

The idea behind KRISPY KREME DL 01 and METAIR INVTS LTD 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.