Correlation Between Springs Global and Karsten SA

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

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

Diversification Opportunities for Springs Global and Karsten SA

0.0

Correlation Coefficient

Springs Global  Karsten SA

Pay attention - limited upside

The 3 months correlation between Springs and Karsten is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Springs Global Participaes and Karsten SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karsten SA and Springs Global 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 Springs Global Participaes are associated (or correlated) with Karsten SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karsten SA has no effect on the direction of Springs Global i.e., Springs Global and Karsten SA go up and down completely randomly.

Pair Corralation between Springs Global and Karsten SA

Assuming the 90 days trading horizon Springs Global Participaes is expected to generate 9.23 times more return on investment than Karsten SA. However, Springs Global is 9.23 times more volatile than Karsten SA. It trades about 0.07 of its potential returns per unit of risk. Karsten SA is currently generating about 0.07 per unit of risk. If you would invest  1,335  in Springs Global Participaes on September 12, 2024 and sell it today you would lose (1,171) from holding Springs Global Participaes or give up 87.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.15%
Values	Daily Returns

Springs Global Participaes  vs.  Karsten SA

Springs Global Parti

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Springs Global Participaes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Springs Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Karsten SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Karsten SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Karsten SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Springs Global and Karsten SA

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

The idea behind Springs Global Participaes and Karsten 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.