Correlation Between Kaufman Et and Charwood Energy

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

By analyzing existing cross correlation between Kaufman Et Broad and Charwood Energy SA, you can compare the effects of market volatilities on Kaufman Et and Charwood Energy 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 Kaufman Et with a short position of Charwood Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaufman Et and Charwood Energy.

Diversification Opportunities for Kaufman Et and Charwood Energy

0.44

Correlation Coefficient

Kaufman Et  Charwood Energy

Very weak diversification

The 3 months correlation between Kaufman and Charwood is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Kaufman Et Broad and Charwood Energy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charwood Energy SA and Kaufman Et 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 Kaufman Et Broad are associated (or correlated) with Charwood Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charwood Energy SA has no effect on the direction of Kaufman Et i.e., Kaufman Et and Charwood Energy go up and down completely randomly.

Pair Corralation between Kaufman Et and Charwood Energy

Assuming the 90 days trading horizon Kaufman Et Broad is expected to generate 0.82 times more return on investment than Charwood Energy. However, Kaufman Et Broad is 1.22 times less risky than Charwood Energy. It trades about 0.04 of its potential returns per unit of risk. Charwood Energy SA is currently generating about -0.09 per unit of risk. If you would invest  2,463  in Kaufman Et Broad on October 10, 2024 and sell it today you would earn a total of  787.00  from holding Kaufman Et Broad or generate 31.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Kaufman Et Broad  vs.  Charwood Energy SA

Kaufman Et Broad

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaufman Et Broad has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Kaufman Et is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Charwood Energy SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charwood Energy SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Kaufman Et and Charwood Energy

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

The idea behind Kaufman Et Broad and Charwood Energy SA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.