Correlation Between Companhia Tecidos and Karsten SA

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

By analyzing existing cross correlation between Companhia Tecidos Santanense and Karsten SA, you can compare the effects of market volatilities on Companhia Tecidos and Karsten SA 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 Companhia Tecidos with a short position of Karsten SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Tecidos and Karsten SA.

Diversification Opportunities for Companhia Tecidos and Karsten SA

-0.72

Correlation Coefficient

Companhia Tecidos  Karsten SA

Pay attention - limited upside

The 3 months correlation between Companhia and Karsten is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Tecidos Santanense and Karsten SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karsten SA and Companhia Tecidos 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 Companhia Tecidos Santanense are associated (or correlated) with Karsten SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karsten SA has no effect on the direction of Companhia Tecidos i.e., Companhia Tecidos and Karsten SA go up and down completely randomly.

Pair Corralation between Companhia Tecidos and Karsten SA

Assuming the 90 days trading horizon Companhia Tecidos Santanense is expected to under-perform the Karsten SA. In addition to that, Companhia Tecidos is 1.64 times more volatile than Karsten SA. It trades about -0.08 of its total potential returns per unit of risk. Karsten SA is currently generating about 0.07 per unit of volatility. If you would invest  2,000  in Karsten SA on September 23, 2024 and sell it today you would earn a total of  189.00  from holding Karsten SA or generate 9.45% return on investment over 90 days.

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

Companhia Tecidos Santanense  vs.  Karsten SA

Companhia Tecidos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia Tecidos Santanense has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Karsten SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Karsten SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Karsten SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Companhia Tecidos and Karsten SA

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

The idea behind Companhia Tecidos Santanense and Karsten SA 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.