Correlation Between Kardex and Interroll Holding

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

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

Diversification Opportunities for Kardex and Interroll Holding

0.4

Correlation Coefficient

Kardex  Interroll Holding

Very weak diversification

The 3 months correlation between Kardex and Interroll is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Kardex and Interroll Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interroll Holding and Kardex 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 Kardex are associated (or correlated) with Interroll Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interroll Holding has no effect on the direction of Kardex i.e., Kardex and Interroll Holding go up and down completely randomly.

Pair Corralation between Kardex and Interroll Holding

Assuming the 90 days trading horizon Kardex is expected to generate 0.92 times more return on investment than Interroll Holding. However, Kardex is 1.09 times less risky than Interroll Holding. It trades about 0.06 of its potential returns per unit of risk. Interroll Holding AG is currently generating about -0.16 per unit of risk. If you would invest  26,300  in Kardex on September 12, 2024 and sell it today you would earn a total of  1,250  from holding Kardex or generate 4.75% return on investment over 90 days.

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

Kardex  vs.  Interroll Holding AG

Kardex

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kardex are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Kardex is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Interroll Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Interroll Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Kardex and Interroll Holding

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

The idea behind Kardex and Interroll Holding AG 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.