Correlation Between Catella AB and KABE Group
Can any of the company-specific risk be diversified away by investing in both Catella AB 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 Catella AB and KABE Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catella AB and KABE Group AB, you can compare the effects of market volatilities on Catella AB 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 Catella AB with a short position of KABE Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catella AB and KABE Group.
Diversification Opportunities for Catella AB and KABE Group
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Catella and KABE is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Catella AB 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 Catella AB 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 Catella AB 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 Catella AB i.e., Catella AB and KABE Group go up and down completely randomly.
Pair Corralation between Catella AB and KABE Group
Assuming the 90 days trading horizon Catella AB is expected to generate 0.93 times more return on investment than KABE Group. However, Catella AB is 1.08 times less risky than KABE Group. It trades about -0.01 of its potential returns per unit of risk. KABE Group AB is currently generating about -0.12 per unit of risk. If you would invest 2,875 in Catella AB on September 5, 2024 and sell it today you would lose (50.00) from holding Catella AB or give up 1.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catella AB vs. KABE Group AB
Performance |
| Timeline |
| Catella AB |
| KABE Group AB |
Catella AB and KABE Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catella AB and KABE Group
The main advantage of trading using opposite Catella AB and KABE Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catella AB 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.| Catella AB vs. Industrivarden AB ser | Catella AB vs. Svenska Handelsbanken AB | Catella AB vs. Investor AB ser |
| KABE Group vs. Truecaller AB | KABE Group vs. Dedicare AB | KABE Group vs. RVRC Holding AB | KABE Group vs. AddLife AB |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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