Correlation Between Keyware Technologies and Brederode

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

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

Diversification Opportunities for Keyware Technologies and Brederode

-0.36

Correlation Coefficient

Keyware Technologies  Brederode

Very good diversification

The 3 months correlation between Keyware and Brederode is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Keyware Technologies NV and Brederode SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brederode SA and Keyware Technologies 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 Keyware Technologies NV are associated (or correlated) with Brederode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brederode SA has no effect on the direction of Keyware Technologies i.e., Keyware Technologies and Brederode go up and down completely randomly.

Pair Corralation between Keyware Technologies and Brederode

Assuming the 90 days trading horizon Keyware Technologies NV is expected to generate 2.13 times more return on investment than Brederode. However, Keyware Technologies is 2.13 times more volatile than Brederode SA. It trades about 0.06 of its potential returns per unit of risk. Brederode SA is currently generating about 0.03 per unit of risk. If you would invest  73.00  in Keyware Technologies NV on September 3, 2024 and sell it today you would earn a total of  6.00  from holding Keyware Technologies NV or generate 8.22% return on investment over 90 days.

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

Keyware Technologies NV  vs.  Brederode SA

Keyware Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Keyware Technologies NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Keyware Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Brederode SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brederode SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Brederode is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Keyware Technologies and Brederode

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

The idea behind Keyware Technologies NV and Brederode 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.