Correlation Between Keyware Technologies and Vastned Retail

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

By analyzing existing cross correlation between Keyware Technologies NV and Vastned Retail Belgium, you can compare the effects of market volatilities on Keyware Technologies and Vastned Retail 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 Keyware Technologies with a short position of Vastned Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keyware Technologies and Vastned Retail.

Diversification Opportunities for Keyware Technologies and Vastned Retail

-0.51

Correlation Coefficient

Keyware Technologies  Vastned Retail

Excellent diversification

The 3 months correlation between Keyware and Vastned is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Keyware Technologies NV and Vastned Retail Belgium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastned Retail Belgium and Keyware Technologies 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 Keyware Technologies NV are associated (or correlated) with Vastned Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastned Retail Belgium has no effect on the direction of Keyware Technologies i.e., Keyware Technologies and Vastned Retail go up and down completely randomly.

Pair Corralation between Keyware Technologies and Vastned Retail

Assuming the 90 days trading horizon Keyware Technologies NV is expected to generate 1.87 times more return on investment than Vastned Retail. However, Keyware Technologies is 1.87 times more volatile than Vastned Retail Belgium. It trades about 0.09 of its potential returns per unit of risk. Vastned Retail Belgium is currently generating about -0.06 per unit of risk. If you would invest  70.00  in Keyware Technologies NV on September 2, 2024 and sell it today you would earn a total of  9.00  from holding Keyware Technologies NV or generate 12.86% return on investment over 90 days.

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

Keyware Technologies NV  vs.  Vastned Retail Belgium

Keyware Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Keyware Technologies NV are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Keyware Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Vastned Retail Belgium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vastned Retail Belgium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Vastned Retail is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Keyware Technologies and Vastned Retail

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

The idea behind Keyware Technologies NV and Vastned Retail Belgium 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.