Correlation Between Bredband2 and KABE Group
Can any of the company-specific risk be diversified away by investing in both Bredband2 and KABE Group 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 Bredband2 and KABE Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bredband2 i Skandinavien and KABE Group AB, you can compare the effects of market volatilities on Bredband2 and KABE Group 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 Bredband2 with a short position of KABE Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bredband2 and KABE Group.
Diversification Opportunities for Bredband2 and KABE Group
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bredband2 and KABE is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bredband2 i Skandinavien and KABE Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KABE Group AB and Bredband2 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 Bredband2 i Skandinavien are associated (or correlated) with KABE Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KABE Group AB has no effect on the direction of Bredband2 i.e., Bredband2 and KABE Group go up and down completely randomly.
Pair Corralation between Bredband2 and KABE Group
Assuming the 90 days trading horizon Bredband2 i Skandinavien is expected to under-perform the KABE Group. But the stock apears to be less risky and, when comparing its historical volatility, Bredband2 i Skandinavien is 1.62 times less risky than KABE Group. The stock trades about -0.18 of its potential returns per unit of risk. The KABE Group AB is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 30,809 in KABE Group AB on September 13, 2024 and sell it today you would lose (1,009) from holding KABE Group AB or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bredband2 i Skandinavien vs. KABE Group AB
Performance |
| Timeline |
| Bredband2 i Skandinavien |
| KABE Group AB |
Bredband2 and KABE Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bredband2 and KABE Group
The main advantage of trading using opposite Bredband2 and KABE Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bredband2 position performs unexpectedly, KABE Group 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 KABE Group will offset losses from the drop in KABE Group's long position.| Bredband2 vs. Stillfront Group AB | Bredband2 vs. Paradox Interactive AB | Bredband2 vs. Catena Media plc | Bredband2 vs. Betsson AB |
| KABE Group vs. Byggmax Group AB | KABE Group vs. Svedbergs i Dalstorp | KABE Group vs. Inwido AB | KABE Group vs. New Wave Group |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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