Correlation Between Kruk SA and Ferro SA

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

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

Diversification Opportunities for Kruk SA and Ferro SA

0.39

Correlation Coefficient

Kruk SA  Ferro SA

Weak diversification

The 3 months correlation between Kruk and Ferro is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kruk SA and Ferro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferro SA and Kruk SA 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 Kruk SA are associated (or correlated) with Ferro SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferro SA has no effect on the direction of Kruk SA i.e., Kruk SA and Ferro SA go up and down completely randomly.

Pair Corralation between Kruk SA and Ferro SA

Assuming the 90 days trading horizon Kruk SA is expected to under-perform the Ferro SA. In addition to that, Kruk SA is 1.89 times more volatile than Ferro SA. It trades about -0.05 of its total potential returns per unit of risk. Ferro SA is currently generating about 0.0 per unit of volatility. If you would invest  3,590  in Ferro SA on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Ferro SA or generate 0.0% return on investment over 90 days.

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

Kruk SA  vs.  Ferro SA

Kruk SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kruk SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Kruk SA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Ferro SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ferro SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Ferro SA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Kruk SA and Ferro SA

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

The idea behind Kruk SA and Ferro 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.