Correlation Between IT Link and Keyrus SA

Can any of the company-specific risk be diversified away by investing in both IT Link and Keyrus SA 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 IT Link and Keyrus SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IT Link and Keyrus SA, you can compare the effects of market volatilities on IT Link and Keyrus SA 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 IT Link with a short position of Keyrus SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of IT Link and Keyrus SA.

Diversification Opportunities for IT Link and Keyrus SA

0.1

Correlation Coefficient

IT Link  Keyrus SA

Average diversification

The 3 months correlation between ALITL and Keyrus is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding IT Link and Keyrus SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyrus SA and IT Link 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 IT Link are associated (or correlated) with Keyrus SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyrus SA has no effect on the direction of IT Link i.e., IT Link and Keyrus SA go up and down completely randomly.

Pair Corralation between IT Link and Keyrus SA

Assuming the 90 days trading horizon IT Link is expected to under-perform the Keyrus SA. In addition to that, IT Link is 1.23 times more volatile than Keyrus SA. It trades about -0.08 of its total potential returns per unit of risk. Keyrus SA is currently generating about 0.01 per unit of volatility. If you would invest  750.00  in Keyrus SA on December 31, 2024 and sell it today you would earn a total of  0.00  from holding Keyrus SA or generate 0.0% return on investment over 90 days.

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

IT Link  vs.  Keyrus SA

IT Link

Risk-Adjusted Performance

Very Weak

Over the last 90 days IT Link has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, IT Link is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Keyrus SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Keyrus SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Keyrus SA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IT Link and Keyrus SA

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

The idea behind IT Link and Keyrus SA 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.