Correlation Between Brookfield Business and KSM Mutual

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Can any of the company-specific risk be diversified away by investing in both Brookfield Business and KSM Mutual 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 Brookfield Business and KSM Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Business Partners and KSM Mutual Funds, you can compare the effects of market volatilities on Brookfield Business and KSM Mutual 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 Brookfield Business with a short position of KSM Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and KSM Mutual.

Diversification Opportunities for Brookfield Business and KSM Mutual

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Brookfield and KSM is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Partners and KSM Mutual Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSM Mutual Funds and Brookfield Business 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 Brookfield Business Partners are associated (or correlated) with KSM Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KSM Mutual Funds has no effect on the direction of Brookfield Business i.e., Brookfield Business and KSM Mutual go up and down completely randomly.

Pair Corralation between Brookfield Business and KSM Mutual

Considering the 90-day investment horizon Brookfield Business is expected to generate 4.52 times less return on investment than KSM Mutual. But when comparing it to its historical volatility, Brookfield Business Partners is 1.69 times less risky than KSM Mutual. It trades about 0.07 of its potential returns per unit of risk. KSM Mutual Funds is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  89,760  in KSM Mutual Funds on December 29, 2023 and sell it today you would earn a total of  8,250  from holding KSM Mutual Funds or generate 9.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy81.82%
ValuesDaily Returns

Brookfield Business Partners  vs.  KSM Mutual Funds

 Performance 
       Timeline  
Brookfield Business 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Partners are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental drivers, Brookfield Business may actually be approaching a critical reversion point that can send shares even higher in April 2024.
KSM Mutual Funds 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in KSM Mutual Funds are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, KSM Mutual sustained solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Business and KSM Mutual Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Brookfield Business and KSM Mutual

The main advantage of trading using opposite Brookfield Business and KSM Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, KSM Mutual 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 KSM Mutual will offset losses from the drop in KSM Mutual's long position.
The idea behind Brookfield Business Partners and KSM Mutual Funds 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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