Correlation Between Brookfield Office and KDA

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

By analyzing existing cross correlation between Brookfield Office Properties and KDA Group, you can compare the effects of market volatilities on Brookfield Office and KDA 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 Brookfield Office with a short position of KDA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Office and KDA.

Diversification Opportunities for Brookfield Office and KDA

-0.2

Correlation Coefficient

Brookfield Office  KDA

Good diversification

The 3 months correlation between Brookfield and KDA is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and KDA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDA Group and Brookfield Office 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 Brookfield Office Properties are associated (or correlated) with KDA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDA Group has no effect on the direction of Brookfield Office i.e., Brookfield Office and KDA go up and down completely randomly.

Pair Corralation between Brookfield Office and KDA

Assuming the 90 days trading horizon Brookfield Office is expected to generate 1.19 times less return on investment than KDA. But when comparing it to its historical volatility, Brookfield Office Properties is 7.02 times less risky than KDA. It trades about 0.29 of its potential returns per unit of risk. KDA Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  25.00  in KDA Group on September 3, 2024 and sell it today you would earn a total of  2.00  from holding KDA Group or generate 8.0% return on investment over 90 days.

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

Brookfield Office Properties  vs.  KDA Group

Brookfield Office

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Office Properties are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Brookfield Office sustained solid returns over the last few months and may actually be approaching a breakup point.

KDA Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KDA Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, KDA showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brookfield Office and KDA

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

The idea behind Brookfield Office Properties and KDA Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.