Correlation Between Marie Brizard and KRAKATAU STEEL

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

By analyzing existing cross correlation between Marie Brizard Wine and KRAKATAU STEEL B , you can compare the effects of market volatilities on Marie Brizard and KRAKATAU STEEL 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 Marie Brizard with a short position of KRAKATAU STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marie Brizard and KRAKATAU STEEL.

Diversification Opportunities for Marie Brizard and KRAKATAU STEEL

0.06

Correlation Coefficient

Marie Brizard  KRAKATAU STEEL

Significant diversification

The 3 months correlation between Marie and KRAKATAU is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Marie Brizard Wine and KRAKATAU STEEL B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KRAKATAU STEEL B and Marie Brizard 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 Marie Brizard Wine are associated (or correlated) with KRAKATAU STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KRAKATAU STEEL B has no effect on the direction of Marie Brizard i.e., Marie Brizard and KRAKATAU STEEL go up and down completely randomly.

Pair Corralation between Marie Brizard and KRAKATAU STEEL

Assuming the 90 days trading horizon Marie Brizard Wine is expected to under-perform the KRAKATAU STEEL. But the stock apears to be less risky and, when comparing its historical volatility, Marie Brizard Wine is 3.0 times less risky than KRAKATAU STEEL. The stock trades about -0.02 of its potential returns per unit of risk. The KRAKATAU STEEL B is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.40  in KRAKATAU STEEL B on September 14, 2024 and sell it today you would earn a total of  0.20  from holding KRAKATAU STEEL B or generate 50.0% return on investment over 90 days.

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

Marie Brizard Wine  vs.  KRAKATAU STEEL B

Marie Brizard Wine

Risk-Adjusted Performance

0 of 100

Very Weak

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

KRAKATAU STEEL B

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KRAKATAU STEEL B are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking signals, KRAKATAU STEEL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marie Brizard and KRAKATAU STEEL

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

The idea behind Marie Brizard Wine and KRAKATAU STEEL B 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.