Correlation Between KRISPY KREME and Computershare

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

By analyzing existing cross correlation between KRISPY KREME DL 01 and Computershare Limited, you can compare the effects of market volatilities on KRISPY KREME and Computershare 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 KRISPY KREME with a short position of Computershare. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and Computershare.

Diversification Opportunities for KRISPY KREME and Computershare

-0.01

Correlation Coefficient

KRISPY KREME  Computershare

Good diversification

The 3 months correlation between KRISPY and Computershare is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 and Computershare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computershare Limited and KRISPY KREME 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 KRISPY KREME DL 01 are associated (or correlated) with Computershare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computershare Limited has no effect on the direction of KRISPY KREME i.e., KRISPY KREME and Computershare go up and down completely randomly.

Pair Corralation between KRISPY KREME and Computershare

Assuming the 90 days horizon KRISPY KREME DL 01 is expected to under-perform the Computershare. In addition to that, KRISPY KREME is 1.42 times more volatile than Computershare Limited. It trades about -0.05 of its total potential returns per unit of risk. Computershare Limited is currently generating about 0.14 per unit of volatility. If you would invest  1,670  in Computershare Limited on September 14, 2024 and sell it today you would earn a total of  260.00  from holding Computershare Limited or generate 15.57% return on investment over 90 days.

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

KRISPY KREME DL 01  vs.  Computershare Limited

KRISPY KREME DL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KRISPY KREME DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Computershare Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Computershare Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Computershare reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KRISPY KREME and Computershare

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

The idea behind KRISPY KREME DL 01 and Computershare Limited 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.