Correlation Between KAP AG and MSCI

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

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

Diversification Opportunities for KAP AG and MSCI

-0.46

Correlation Coefficient

KAP AG  MSCI

Very good diversification

The 3 months correlation between KAP and MSCI is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding KAP AG and MSCI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSCI Inc and KAP AG 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 KAP AG are associated (or correlated) with MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSCI Inc has no effect on the direction of KAP AG i.e., KAP AG and MSCI go up and down completely randomly.

Pair Corralation between KAP AG and MSCI

Assuming the 90 days horizon KAP AG is expected to generate 1.71 times less return on investment than MSCI. In addition to that, KAP AG is 2.84 times more volatile than MSCI Inc. It trades about 0.02 of its total potential returns per unit of risk. MSCI Inc is currently generating about 0.07 per unit of volatility. If you would invest  46,673  in MSCI Inc on April 22, 2025 and sell it today you would earn a total of  2,977  from holding MSCI Inc or generate 6.38% return on investment over 90 days.

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

KAP AG  vs.  MSCI Inc

KAP AG

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KAP AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, KAP AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

MSCI Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MSCI Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, MSCI may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with KAP AG and MSCI

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

The idea behind KAP AG and MSCI Inc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.