Correlation Between Manitou BF and Kalray SA

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

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

Diversification Opportunities for Manitou BF and Kalray SA

0.4

Correlation Coefficient

Manitou BF  Kalray SA

Very weak diversification

The 3 months correlation between Manitou and Kalray is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Manitou BF SA and Kalray SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalray SA and Manitou BF 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 Manitou BF SA are associated (or correlated) with Kalray SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalray SA has no effect on the direction of Manitou BF i.e., Manitou BF and Kalray SA go up and down completely randomly.

Pair Corralation between Manitou BF and Kalray SA

Assuming the 90 days trading horizon Manitou BF SA is expected to under-perform the Kalray SA. But the stock apears to be less risky and, when comparing its historical volatility, Manitou BF SA is 12.71 times less risky than Kalray SA. The stock trades about -0.01 of its potential returns per unit of risk. The Kalray SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  109.00  in Kalray SA on September 23, 2024 and sell it today you would lose (7.00) from holding Kalray SA or give up 6.42% of portfolio value over 90 days.

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

Manitou BF SA  vs.  Kalray SA

Manitou BF SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kalray SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Manitou BF and Kalray SA

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

The idea behind Manitou BF SA and Kalray 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.