Correlation Between KOBE STEEL and CALTAGIRONE EDITORE

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

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

Diversification Opportunities for KOBE STEEL and CALTAGIRONE EDITORE

-0.78

Correlation Coefficient

KOBE STEEL  CALTAGIRONE EDITORE

Pay attention - limited upside

The 3 months correlation between KOBE and CALTAGIRONE is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding KOBE STEEL LTD and CALTAGIRONE EDITORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CALTAGIRONE EDITORE and KOBE STEEL 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 KOBE STEEL LTD are associated (or correlated) with CALTAGIRONE EDITORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CALTAGIRONE EDITORE has no effect on the direction of KOBE STEEL i.e., KOBE STEEL and CALTAGIRONE EDITORE go up and down completely randomly.

Pair Corralation between KOBE STEEL and CALTAGIRONE EDITORE

Assuming the 90 days trading horizon KOBE STEEL LTD is expected to under-perform the CALTAGIRONE EDITORE. But the stock apears to be less risky and, when comparing its historical volatility, KOBE STEEL LTD is 1.25 times less risky than CALTAGIRONE EDITORE. The stock trades about -0.08 of its potential returns per unit of risk. The CALTAGIRONE EDITORE is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  117.00  in CALTAGIRONE EDITORE on October 8, 2024 and sell it today you would earn a total of  12.00  from holding CALTAGIRONE EDITORE or generate 10.26% return on investment over 90 days.

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

KOBE STEEL LTD  vs.  CALTAGIRONE EDITORE

KOBE STEEL LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KOBE STEEL LTD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

CALTAGIRONE EDITORE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CALTAGIRONE EDITORE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CALTAGIRONE EDITORE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with KOBE STEEL and CALTAGIRONE EDITORE

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

The idea behind KOBE STEEL LTD and CALTAGIRONE EDITORE 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.