Correlation Between Karsten SA and Iron Mountain

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

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

Diversification Opportunities for Karsten SA and Iron Mountain

0.22

Correlation Coefficient

Karsten SA  Iron Mountain

Modest diversification

The 3 months correlation between Karsten and Iron is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Karsten SA and Iron Mountain Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain 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 Iron Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Mountain has no effect on the direction of Karsten SA i.e., Karsten SA and Iron Mountain go up and down completely randomly.

Pair Corralation between Karsten SA and Iron Mountain

Assuming the 90 days trading horizon Karsten SA is expected to generate 7.92 times less return on investment than Iron Mountain. In addition to that, Karsten SA is 1.11 times more volatile than Iron Mountain Incorporated. It trades about 0.01 of its total potential returns per unit of risk. Iron Mountain Incorporated is currently generating about 0.12 per unit of volatility. If you would invest  25,804  in Iron Mountain Incorporated on October 13, 2024 and sell it today you would earn a total of  36,701  from holding Iron Mountain Incorporated or generate 142.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	67.07%
Values	Daily Returns

Karsten SA  vs.  Iron Mountain Incorporated

Karsten SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Karsten SA are ranked lower than 7 (%) 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.

Iron Mountain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iron Mountain Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Iron Mountain is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Karsten SA and Iron Mountain

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

The idea behind Karsten SA and Iron Mountain Incorporated 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..