Correlation Between Karsten SA and Electro Ao

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

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

Diversification Opportunities for Karsten SA and Electro Ao

-0.43

Correlation Coefficient

Karsten SA  Electro Ao

Very good diversification

The 3 months correlation between Karsten and Electro is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Karsten SA and Electro Ao Altona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electro Ao Altona 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 Electro Ao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electro Ao Altona has no effect on the direction of Karsten SA i.e., Karsten SA and Electro Ao go up and down completely randomly.

Pair Corralation between Karsten SA and Electro Ao

Assuming the 90 days trading horizon Karsten SA is expected to generate 1.56 times more return on investment than Electro Ao. However, Karsten SA is 1.56 times more volatile than Electro Ao Altona. It trades about 0.13 of its potential returns per unit of risk. Electro Ao Altona is currently generating about 0.13 per unit of risk. If you would invest  2,061  in Karsten SA on October 24, 2024 and sell it today you would earn a total of  129.00  from holding Karsten SA or generate 6.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Karsten SA  vs.  Electro Ao Altona

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 unveiled solid returns over the last few months and may actually be approaching a breakup point.

Electro Ao Altona

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Electro Ao Altona are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Electro Ao is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Karsten SA and Electro Ao

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

The idea behind Karsten SA and Electro Ao Altona 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.