Correlation Between Karelia Tobacco and Marfin Investment

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

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

Diversification Opportunities for Karelia Tobacco and Marfin Investment

0.4

Correlation Coefficient

Karelia Tobacco  Marfin Investment

Very weak diversification

The 3 months correlation between Karelia and Marfin is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Karelia Tobacco and Marfin Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfin Investment and Karelia Tobacco 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 Karelia Tobacco are associated (or correlated) with Marfin Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfin Investment has no effect on the direction of Karelia Tobacco i.e., Karelia Tobacco and Marfin Investment go up and down completely randomly.

Pair Corralation between Karelia Tobacco and Marfin Investment

Assuming the 90 days trading horizon Karelia Tobacco is expected to generate 0.4 times more return on investment than Marfin Investment. However, Karelia Tobacco is 2.53 times less risky than Marfin Investment. It trades about -0.03 of its potential returns per unit of risk. Marfin Investment Group is currently generating about -0.08 per unit of risk. If you would invest  34,000  in Karelia Tobacco on October 9, 2024 and sell it today you would lose (400.00) from holding Karelia Tobacco or give up 1.18% of portfolio value over 90 days.

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

Karelia Tobacco  vs.  Marfin Investment Group

Karelia Tobacco

Risk-Adjusted Performance

0 of 100

Very Weak

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

Marfin Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marfin Investment Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Karelia Tobacco and Marfin Investment

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

The idea behind Karelia Tobacco and Marfin Investment Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.