Correlation Between Grupa KTY and Enter Air

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

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

Diversification Opportunities for Grupa KTY and Enter Air

0.85

Correlation Coefficient

Grupa KTY  Enter Air

Very poor diversification

The 3 months correlation between Grupa and Enter is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Grupa KTY SA and Enter Air SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enter Air SA and Grupa KTY 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 Grupa KTY SA are associated (or correlated) with Enter Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enter Air SA has no effect on the direction of Grupa KTY i.e., Grupa KTY and Enter Air go up and down completely randomly.

Pair Corralation between Grupa KTY and Enter Air

Assuming the 90 days trading horizon Grupa KTY SA is expected to generate 1.09 times more return on investment than Enter Air. However, Grupa KTY is 1.09 times more volatile than Enter Air SA. It trades about 0.27 of its potential returns per unit of risk. Enter Air SA is currently generating about 0.16 per unit of risk. If you would invest  67,650  in Grupa KTY SA on December 20, 2024 and sell it today you would earn a total of  18,250  from holding Grupa KTY SA or generate 26.98% return on investment over 90 days.

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

Grupa KTY SA  vs.  Enter Air SA

Grupa KTY SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grupa KTY SA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Grupa KTY reported solid returns over the last few months and may actually be approaching a breakup point.

Enter Air SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enter Air SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Enter Air reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupa KTY and Enter Air

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

The idea behind Grupa KTY SA and Enter Air 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.