Correlation Between Dhler SA and Karsten SA

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

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

Diversification Opportunities for Dhler SA and Karsten SA

0.24

Correlation Coefficient

Dhler SA  Karsten SA

Modest diversification

The 3 months correlation between Dhler and Karsten is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dhler SA and Karsten SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karsten SA and Dhler 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 Dhler SA are associated (or correlated) with Karsten SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karsten SA has no effect on the direction of Dhler SA i.e., Dhler SA and Karsten SA go up and down completely randomly.

Pair Corralation between Dhler SA and Karsten SA

Assuming the 90 days trading horizon Dhler SA is expected to generate 34.95 times less return on investment than Karsten SA. But when comparing it to its historical volatility, Dhler SA is 2.15 times less risky than Karsten SA. It trades about 0.01 of its potential returns per unit of risk. Karsten SA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,189  in Karsten SA on December 2, 2024 and sell it today you would earn a total of  1,220  from holding Karsten SA or generate 55.73% return on investment over 90 days.

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

Dhler SA  vs.  Karsten SA

Dhler SA

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with Dhler SA and Karsten SA

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

The idea behind Dhler SA and Karsten 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.