Correlation Between Sparinvest INDEX and Brd Klee

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

By analyzing existing cross correlation between Sparinvest INDEX Globale and Brd Klee AS, you can compare the effects of market volatilities on Sparinvest INDEX and Brd Klee 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 Sparinvest INDEX with a short position of Brd Klee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparinvest INDEX and Brd Klee.

Diversification Opportunities for Sparinvest INDEX and Brd Klee

0.48

Correlation Coefficient

Sparinvest INDEX  Brd Klee

Very weak diversification

The 3 months correlation between Sparinvest and Brd is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sparinvest INDEX Globale and Brd Klee AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brd Klee AS and Sparinvest INDEX 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 Sparinvest INDEX Globale are associated (or correlated) with Brd Klee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brd Klee AS has no effect on the direction of Sparinvest INDEX i.e., Sparinvest INDEX and Brd Klee go up and down completely randomly.

Pair Corralation between Sparinvest INDEX and Brd Klee

Assuming the 90 days trading horizon Sparinvest INDEX Globale is expected to generate 0.2 times more return on investment than Brd Klee. However, Sparinvest INDEX Globale is 4.98 times less risky than Brd Klee. It trades about 0.05 of its potential returns per unit of risk. Brd Klee AS is currently generating about 0.0 per unit of risk. If you would invest  13,426  in Sparinvest INDEX Globale on December 27, 2024 and sell it today you would earn a total of  284.00  from holding Sparinvest INDEX Globale or generate 2.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Sparinvest INDEX Globale  vs.  Brd Klee AS

Sparinvest INDEX Globale

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sparinvest INDEX Globale are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Sparinvest INDEX is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Brd Klee AS

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sparinvest INDEX and Brd Klee

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

The idea behind Sparinvest INDEX Globale and Brd Klee AS 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.