Correlation Between ISEQ 20 and KLP AksjeGlobal

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both ISEQ 20 and KLP AksjeGlobal 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 ISEQ 20 and KLP AksjeGlobal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ISEQ 20 Price and KLP AksjeGlobal Indeks, you can compare the effects of market volatilities on ISEQ 20 and KLP AksjeGlobal 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 ISEQ 20 with a short position of KLP AksjeGlobal. Check out your portfolio center. Please also check ongoing floating volatility patterns of ISEQ 20 and KLP AksjeGlobal.

Diversification Opportunities for ISEQ 20 and KLP AksjeGlobal

-0.45
  Correlation Coefficient

Very good diversification

The 3 months correlation between ISEQ and KLP is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding ISEQ 20 Price and KLP AksjeGlobal Indeks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLP AksjeGlobal Indeks and ISEQ 20 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 ISEQ 20 Price are associated (or correlated) with KLP AksjeGlobal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLP AksjeGlobal Indeks has no effect on the direction of ISEQ 20 i.e., ISEQ 20 and KLP AksjeGlobal go up and down completely randomly.
    Optimize

Pair Corralation between ISEQ 20 and KLP AksjeGlobal

Assuming the 90 days trading horizon ISEQ 20 Price is expected to under-perform the KLP AksjeGlobal. In addition to that, ISEQ 20 is 1.77 times more volatile than KLP AksjeGlobal Indeks. It trades about -0.02 of its total potential returns per unit of risk. KLP AksjeGlobal Indeks is currently generating about 0.2 per unit of volatility. If you would invest  384,759  in KLP AksjeGlobal Indeks on September 18, 2024 and sell it today you would earn a total of  27,456  from holding KLP AksjeGlobal Indeks or generate 7.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy98.44%
ValuesDaily Returns

ISEQ 20 Price  vs.  KLP AksjeGlobal Indeks

 Performance 
       Timeline  

ISEQ 20 and KLP AksjeGlobal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ISEQ 20 and KLP AksjeGlobal

The main advantage of trading using opposite ISEQ 20 and KLP AksjeGlobal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ISEQ 20 position performs unexpectedly, KLP AksjeGlobal 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 KLP AksjeGlobal will offset losses from the drop in KLP AksjeGlobal's long position.
The idea behind ISEQ 20 Price and KLP AksjeGlobal Indeks 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.
Check out your portfolio center.
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

Other Complementary Tools

Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Economic Indicators
Top statistical indicators that provide insights into how an economy is performing