Correlation Between Karsten SA and Dell Technologies

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

By analyzing existing cross correlation between Karsten SA and Dell Technologies, you can compare the effects of market volatilities on Karsten SA and Dell Technologies 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 Dell Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karsten SA and Dell Technologies.

Diversification Opportunities for Karsten SA and Dell Technologies

0.53

Correlation Coefficient

Karsten SA  Dell Technologies

Very weak diversification

The 3 months correlation between Karsten and Dell is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Karsten SA and Dell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dell Technologies 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 Dell Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dell Technologies has no effect on the direction of Karsten SA i.e., Karsten SA and Dell Technologies go up and down completely randomly.

Pair Corralation between Karsten SA and Dell Technologies

Assuming the 90 days trading horizon Karsten SA is expected to generate 9.1 times less return on investment than Dell Technologies. But when comparing it to its historical volatility, Karsten SA is 1.44 times less risky than Dell Technologies. It trades about 0.01 of its potential returns per unit of risk. Dell Technologies is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  20,992  in Dell Technologies on September 23, 2024 and sell it today you would earn a total of  49,583  from holding Dell Technologies or generate 236.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.99%
Values	Daily Returns

Karsten SA  vs.  Dell Technologies

Karsten SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Karsten SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Karsten SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dell Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dell Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Dell Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Karsten SA and Dell Technologies

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

The idea behind Karsten SA and Dell Technologies 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.