Correlation Between KASPIKZ 1 and ADYEN NV

Can any of the company-specific risk be diversified away by investing in both KASPIKZ 1 and ADYEN NV 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 KASPIKZ 1 and ADYEN NV into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KASPIKZ 1 and ADYEN NV UNSPADR001, you can compare the effects of market volatilities on KASPIKZ 1 and ADYEN NV 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 KASPIKZ 1 with a short position of ADYEN NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of KASPIKZ 1 and ADYEN NV.

Diversification Opportunities for KASPIKZ 1 and ADYEN NV

-0.45

Correlation Coefficient

KASPIKZ 1  ADYEN NV

Very good diversification

The 3 months correlation between KASPIKZ and ADYEN is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding KASPIKZ 1 and ADYEN NV UNSPADR001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADYEN NV UNSPADR001 and KASPIKZ 1 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 KASPIKZ 1 are associated (or correlated) with ADYEN NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADYEN NV UNSPADR001 has no effect on the direction of KASPIKZ 1 i.e., KASPIKZ 1 and ADYEN NV go up and down completely randomly.

Pair Corralation between KASPIKZ 1 and ADYEN NV

Assuming the 90 days horizon KASPIKZ 1 is expected to under-perform the ADYEN NV. In addition to that, KASPIKZ 1 is 1.12 times more volatile than ADYEN NV UNSPADR001. It trades about -0.03 of its total potential returns per unit of risk. ADYEN NV UNSPADR001 is currently generating about 0.04 per unit of volatility. If you would invest  1,270  in ADYEN NV UNSPADR001 on September 4, 2024 and sell it today you would earn a total of  70.00  from holding ADYEN NV UNSPADR001 or generate 5.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

KASPIKZ 1  vs.  ADYEN NV UNSPADR001

KASPIKZ 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KASPIKZ 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ADYEN NV UNSPADR001

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ADYEN NV UNSPADR001 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ADYEN NV may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with KASPIKZ 1 and ADYEN NV

The main advantage of trading using opposite KASPIKZ 1 and ADYEN NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KASPIKZ 1 position performs unexpectedly, ADYEN NV 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 ADYEN NV will offset losses from the drop in ADYEN NV's long position.

The idea behind KASPIKZ 1 and ADYEN NV UNSPADR001 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.