Correlation Between Karsten SA and Companhia

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

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

Diversification Opportunities for Karsten SA and Companhia

0.0

Correlation Coefficient

Karsten SA  Companhia

Pay attention - limited upside

The 3 months correlation between Karsten and Companhia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Karsten SA and Companhia de Tecidos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Tecidos and Karsten SA 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 Karsten SA are associated (or correlated) with Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Tecidos has no effect on the direction of Karsten SA i.e., Karsten SA and Companhia go up and down completely randomly.

Pair Corralation between Karsten SA and Companhia

Assuming the 90 days trading horizon Karsten SA is expected to generate 1.19 times less return on investment than Companhia. But when comparing it to its historical volatility, Karsten SA is 3.3 times less risky than Companhia. It trades about 0.05 of its potential returns per unit of risk. Companhia de Tecidos is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  136.00  in Companhia de Tecidos on December 2, 2024 and sell it today you would lose (50.00) from holding Companhia de Tecidos or give up 36.76% of portfolio value over 90 days.

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

Karsten SA  vs.  Companhia de Tecidos

Karsten SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Karsten SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Karsten SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Companhia de Tecidos

Risk-Adjusted Performance

Very Weak

Over the last 90 days Companhia de Tecidos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Companhia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Karsten SA and Companhia

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

The idea behind Karsten SA and Companhia de Tecidos 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.