Correlation Between Road Studio and KCI SA

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

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

Diversification Opportunities for Road Studio and KCI SA

0.51

Correlation Coefficient

Road Studio  KCI SA

Very weak diversification

The 3 months correlation between Road and KCI is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Road Studio SA and KCI SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCI SA and Road Studio 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 Road Studio SA are associated (or correlated) with KCI SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCI SA has no effect on the direction of Road Studio i.e., Road Studio and KCI SA go up and down completely randomly.

Pair Corralation between Road Studio and KCI SA

Assuming the 90 days trading horizon Road Studio SA is expected to under-perform the KCI SA. But the stock apears to be less risky and, when comparing its historical volatility, Road Studio SA is 1.04 times less risky than KCI SA. The stock trades about -0.11 of its potential returns per unit of risk. The KCI SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  86.00  in KCI SA on December 4, 2024 and sell it today you would earn a total of  4.00  from holding KCI SA or generate 4.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Road Studio SA  vs.  KCI SA

Road Studio SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Road Studio SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Road Studio reported solid returns over the last few months and may actually be approaching a breakup point.

KCI SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KCI SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, KCI SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Road Studio and KCI SA

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

The idea behind Road Studio SA and KCI 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.