Correlation Between Kua Investments and Brookfield

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

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

Diversification Opportunities for Kua Investments and Brookfield

0.01

Correlation Coefficient

Kua Investments  Brookfield

Significant diversification

The 3 months correlation between Kua and Brookfield is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kua Investments and Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield and Kua Investments 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 Kua Investments are associated (or correlated) with Brookfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield has no effect on the direction of Kua Investments i.e., Kua Investments and Brookfield go up and down completely randomly.

Pair Corralation between Kua Investments and Brookfield

Assuming the 90 days trading horizon Kua Investments is expected to under-perform the Brookfield. In addition to that, Kua Investments is 7.44 times more volatile than Brookfield. It trades about -0.01 of its total potential returns per unit of risk. Brookfield is currently generating about 0.04 per unit of volatility. If you would invest  1,948  in Brookfield on July 7, 2024 and sell it today you would earn a total of  377.00  from holding Brookfield or generate 19.35% return on investment over 90 days.

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

Kua Investments  vs.  Brookfield

Kua Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kua Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in November 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Brookfield

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Brookfield is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kua Investments and Brookfield

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

The idea behind Kua Investments and Brookfield 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.