Correlation Between Barloworld and Keen Vision

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

By analyzing existing cross correlation between Barloworld Ltd ADR and Keen Vision Acquisition, you can compare the effects of market volatilities on Barloworld and Keen Vision 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 Barloworld with a short position of Keen Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Keen Vision.

Diversification Opportunities for Barloworld and Keen Vision

-0.07

Correlation Coefficient

Barloworld  Keen Vision

Good diversification

The 3 months correlation between Barloworld and Keen is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Keen Vision Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keen Vision Acquisition and Barloworld 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 Barloworld Ltd ADR are associated (or correlated) with Keen Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keen Vision Acquisition has no effect on the direction of Barloworld i.e., Barloworld and Keen Vision go up and down completely randomly.

Pair Corralation between Barloworld and Keen Vision

Assuming the 90 days horizon Barloworld Ltd ADR is expected to under-perform the Keen Vision. But the pink sheet apears to be less risky and, when comparing its historical volatility, Barloworld Ltd ADR is 1.29 times less risky than Keen Vision. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Keen Vision Acquisition is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,073  in Keen Vision Acquisition on September 12, 2024 and sell it today you would earn a total of  19.00  from holding Keen Vision Acquisition or generate 1.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Barloworld Ltd ADR  vs.  Keen Vision Acquisition

Barloworld ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barloworld Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Barloworld is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Keen Vision Acquisition

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Keen Vision Acquisition are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Keen Vision may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Barloworld and Keen Vision

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

The idea behind Barloworld Ltd ADR and Keen Vision Acquisition 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.