Correlation Between KLA and Metalrgica Riosulense

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

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

Diversification Opportunities for KLA and Metalrgica Riosulense

-0.17

Correlation Coefficient

KLA  Metalrgica Riosulense

Good diversification

The 3 months correlation between KLA and Metalrgica is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding KLA Corp. and Metalrgica Riosulense SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalrgica Riosulense and KLA 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 KLA Corporation are associated (or correlated) with Metalrgica Riosulense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalrgica Riosulense has no effect on the direction of KLA i.e., KLA and Metalrgica Riosulense go up and down completely randomly.

Pair Corralation between KLA and Metalrgica Riosulense

Assuming the 90 days trading horizon KLA is expected to generate 15.12 times less return on investment than Metalrgica Riosulense. In addition to that, KLA is 1.8 times more volatile than Metalrgica Riosulense SA. It trades about 0.01 of its total potential returns per unit of risk. Metalrgica Riosulense SA is currently generating about 0.37 per unit of volatility. If you would invest  5,500  in Metalrgica Riosulense SA on December 24, 2024 and sell it today you would earn a total of  1,549  from holding Metalrgica Riosulense SA or generate 28.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

KLA Corp.  vs.  Metalrgica Riosulense SA

KLA Corporation

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KLA Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, KLA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Metalrgica Riosulense

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Metalrgica Riosulense SA are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Metalrgica Riosulense unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KLA and Metalrgica Riosulense

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

The idea behind KLA Corporation and Metalrgica Riosulense 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..