Correlation Between KRISPY KREME and Infrastrutture Wireless

Can any of the company-specific risk be diversified away by investing in both KRISPY KREME and Infrastrutture Wireless 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 Infrastrutture Wireless 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 Infrastrutture Wireless Italiane, you can compare the effects of market volatilities on KRISPY KREME and Infrastrutture Wireless 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 Infrastrutture Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and Infrastrutture Wireless.

Diversification Opportunities for KRISPY KREME and Infrastrutture Wireless

-0.06

Correlation Coefficient

KRISPY KREME  Infrastrutture Wireless

Good diversification

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

Pair Corralation between KRISPY KREME and Infrastrutture Wireless

Assuming the 90 days horizon KRISPY KREME DL 01 is expected to under-perform the Infrastrutture Wireless. In addition to that, KRISPY KREME is 1.6 times more volatile than Infrastrutture Wireless Italiane. It trades about -0.45 of its total potential returns per unit of risk. Infrastrutture Wireless Italiane is currently generating about -0.11 per unit of volatility. If you would invest  965.00  in Infrastrutture Wireless Italiane on September 29, 2024 and sell it today you would lose (18.00) from holding Infrastrutture Wireless Italiane or give up 1.87% of portfolio value over 90 days.

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

KRISPY KREME DL 01  vs.  Infrastrutture Wireless Italia

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 nearly stable basic indicators, KRISPY KREME is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Infrastrutture Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infrastrutture Wireless Italiane has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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.

Pair Trading with KRISPY KREME and Infrastrutture Wireless

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

The idea behind KRISPY KREME DL 01 and Infrastrutture Wireless Italiane 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.