Correlation Between KDA and Brookfield

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

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

Diversification Opportunities for KDA and Brookfield

0.61

Correlation Coefficient

KDA  Brookfield

Poor diversification

The 3 months correlation between KDA and Brookfield is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding KDA Group and Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield and KDA 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 KDA Group are associated (or correlated) with Brookfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield has no effect on the direction of KDA i.e., KDA and Brookfield go up and down completely randomly.

Pair Corralation between KDA and Brookfield

Assuming the 90 days horizon KDA Group is expected to generate 9.02 times more return on investment than Brookfield. However, KDA is 9.02 times more volatile than Brookfield. It trades about 0.03 of its potential returns per unit of risk. Brookfield is currently generating about 0.24 per unit of risk. If you would invest  28.00  in KDA Group on October 13, 2024 and sell it today you would earn a total of  0.00  from holding KDA Group or generate 0.0% return on investment over 90 days.

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

KDA Group  vs.  Brookfield

KDA Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KDA Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, KDA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Brookfield

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Brookfield may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with KDA and Brookfield

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

The idea behind KDA Group and Brookfield 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.