Correlation Between Pierce Group and Karnov Group

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

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

Diversification Opportunities for Pierce Group and Karnov Group

-0.56

Correlation Coefficient

Pierce Group  Karnov Group

Excellent diversification

The 3 months correlation between Pierce and Karnov is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Pierce Group AB and Karnov Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karnov Group AB and Pierce Group 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 Pierce Group AB are associated (or correlated) with Karnov Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karnov Group AB has no effect on the direction of Pierce Group i.e., Pierce Group and Karnov Group go up and down completely randomly.

Pair Corralation between Pierce Group and Karnov Group

Assuming the 90 days trading horizon Pierce Group is expected to generate 1.86 times less return on investment than Karnov Group. But when comparing it to its historical volatility, Pierce Group AB is 1.07 times less risky than Karnov Group. It trades about 0.18 of its potential returns per unit of risk. Karnov Group AB is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  8,100  in Karnov Group AB on October 26, 2024 and sell it today you would earn a total of  840.00  from holding Karnov Group AB or generate 10.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

Pierce Group AB  vs.  Karnov Group AB

Pierce Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pierce Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Karnov Group AB

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Karnov Group AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Karnov Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pierce Group and Karnov Group

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

The idea behind Pierce Group AB and Karnov Group AB 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.