Correlation Between KlausTech and CyberAgent ADR

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

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

Diversification Opportunities for KlausTech and CyberAgent ADR

0.0

Correlation Coefficient

KlausTech  CyberAgent ADR

Pay attention - limited upside

The 3 months correlation between KlausTech and CyberAgent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KlausTech and CyberAgent ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberAgent ADR and KlausTech 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 KlausTech are associated (or correlated) with CyberAgent ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberAgent ADR has no effect on the direction of KlausTech i.e., KlausTech and CyberAgent ADR go up and down completely randomly.

Pair Corralation between KlausTech and CyberAgent ADR

Given the investment horizon of 90 days KlausTech is expected to under-perform the CyberAgent ADR. In addition to that, KlausTech is 1.86 times more volatile than CyberAgent ADR. It trades about -0.05 of its total potential returns per unit of risk. CyberAgent ADR is currently generating about -0.02 per unit of volatility. If you would invest  459.00  in CyberAgent ADR on October 11, 2024 and sell it today you would lose (149.00) from holding CyberAgent ADR or give up 32.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.3%
Values	Daily Returns

KlausTech  vs.  CyberAgent ADR

KlausTech

Risk-Adjusted Performance

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Very Weak

Over the last 90 days KlausTech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, KlausTech is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

CyberAgent ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CyberAgent ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with KlausTech and CyberAgent ADR

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

The idea behind KlausTech and CyberAgent ADR 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.