Correlation Between Esprinet SpA and KAGA EL

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

By analyzing existing cross correlation between Esprinet SpA and KAGA EL LTD, you can compare the effects of market volatilities on Esprinet SpA and KAGA EL 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 Esprinet SpA with a short position of KAGA EL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esprinet SpA and KAGA EL.

Diversification Opportunities for Esprinet SpA and KAGA EL

-0.02

Correlation Coefficient

Esprinet SpA  KAGA EL

Good diversification

The 3 months correlation between Esprinet and KAGA is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Esprinet SpA and KAGA EL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAGA EL LTD and Esprinet SpA 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 Esprinet SpA are associated (or correlated) with KAGA EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAGA EL LTD has no effect on the direction of Esprinet SpA i.e., Esprinet SpA and KAGA EL go up and down completely randomly.

Pair Corralation between Esprinet SpA and KAGA EL

Assuming the 90 days trading horizon Esprinet SpA is expected to under-perform the KAGA EL. In addition to that, Esprinet SpA is 1.73 times more volatile than KAGA EL LTD. It trades about -0.24 of its total potential returns per unit of risk. KAGA EL LTD is currently generating about 0.01 per unit of volatility. If you would invest  1,730  in KAGA EL LTD on September 30, 2024 and sell it today you would earn a total of  10.00  from holding KAGA EL LTD or generate 0.58% return on investment over 90 days.

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

Esprinet SpA  vs.  KAGA EL LTD

Esprinet SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Esprinet SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

KAGA EL LTD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KAGA EL LTD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, KAGA EL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Esprinet SpA and KAGA EL

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

The idea behind Esprinet SpA and KAGA EL LTD 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.