Correlation Between Ita Unibanco and Karsten SA

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

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

Diversification Opportunities for Ita Unibanco and Karsten SA

-0.73

Correlation Coefficient

Ita Unibanco  Karsten SA

Pay attention - limited upside

The 3 months correlation between Ita and Karsten is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ita Unibanco Holding and Karsten SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karsten SA and Ita Unibanco 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 Ita Unibanco Holding 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 Ita Unibanco i.e., Ita Unibanco and Karsten SA go up and down completely randomly.

Pair Corralation between Ita Unibanco and Karsten SA

Assuming the 90 days trading horizon Ita Unibanco is expected to generate 71.17 times less return on investment than Karsten SA. But when comparing it to its historical volatility, Ita Unibanco Holding is 1.68 times less risky than Karsten SA. It trades about 0.0 of its potential returns per unit of risk. Karsten SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,901  in Karsten SA on September 22, 2024 and sell it today you would earn a total of  288.00  from holding Karsten SA or generate 15.15% return on investment over 90 days.

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

Ita Unibanco Holding  vs.  Karsten SA

Ita Unibanco Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ita Unibanco Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains 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 Ita Unibanco and Karsten SA

The main advantage of trading using opposite Ita Unibanco and Karsten SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ita Unibanco 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 Ita Unibanco Holding 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.