Correlation Between Grupa KTY and Stalprodukt

Can any of the company-specific risk be diversified away by investing in both Grupa KTY and Stalprodukt 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 Stalprodukt 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 Stalprodukt SA, you can compare the effects of market volatilities on Grupa KTY and Stalprodukt 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 Stalprodukt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupa KTY and Stalprodukt.

Diversification Opportunities for Grupa KTY and Stalprodukt

0.43

Correlation Coefficient

Grupa KTY  Stalprodukt

Very weak diversification

The 3 months correlation between Grupa and Stalprodukt is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Grupa KTY SA and Stalprodukt SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stalprodukt 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 Stalprodukt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stalprodukt SA has no effect on the direction of Grupa KTY i.e., Grupa KTY and Stalprodukt go up and down completely randomly.

Pair Corralation between Grupa KTY and Stalprodukt

Assuming the 90 days trading horizon Grupa KTY SA is expected to under-perform the Stalprodukt. In addition to that, Grupa KTY is 1.86 times more volatile than Stalprodukt SA. It trades about -0.13 of its total potential returns per unit of risk. Stalprodukt SA is currently generating about -0.15 per unit of volatility. If you would invest  24,900  in Stalprodukt SA on October 10, 2024 and sell it today you would lose (2,500) from holding Stalprodukt SA or give up 10.04% of portfolio value over 90 days.

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

Grupa KTY SA  vs.  Stalprodukt SA

Grupa KTY SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupa KTY 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.

Stalprodukt SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stalprodukt SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Grupa KTY and Stalprodukt

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

The idea behind Grupa KTY SA and Stalprodukt 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.