Correlation Between CellaVision and Know IT
Can any of the company-specific risk be diversified away by investing in both CellaVision and Know IT 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 CellaVision and Know IT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CellaVision AB and Know IT AB, you can compare the effects of market volatilities on CellaVision and Know IT 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 CellaVision with a short position of Know IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of CellaVision and Know IT.
Diversification Opportunities for CellaVision and Know IT
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CellaVision and Know is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CellaVision AB and Know IT AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Know IT AB and CellaVision 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 CellaVision AB are associated (or correlated) with Know IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Know IT AB has no effect on the direction of CellaVision i.e., CellaVision and Know IT go up and down completely randomly.
Pair Corralation between CellaVision and Know IT
Assuming the 90 days trading horizon CellaVision AB is expected to under-perform the Know IT. In addition to that, CellaVision is 1.44 times more volatile than Know IT AB. It trades about -0.18 of its total potential returns per unit of risk. Know IT AB is currently generating about 0.05 per unit of volatility. If you would invest 13,245 in Know IT AB on August 31, 2024 and sell it today you would earn a total of 215.00 from holding Know IT AB or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CellaVision AB vs. Know IT AB
Performance |
| Timeline |
| CellaVision AB |
| Know IT AB |
CellaVision and Know IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CellaVision and Know IT
The main advantage of trading using opposite CellaVision and Know IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CellaVision position performs unexpectedly, Know IT 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 Know IT will offset losses from the drop in Know IT's long position.| CellaVision vs. Cantargia AB | CellaVision vs. BioArctic AB | CellaVision vs. Oncopeptides AB | CellaVision vs. Hansa Biopharma AB |
| Know IT vs. Enea AB | Know IT vs. Lagercrantz Group AB | Know IT vs. Vitec Software Group | Know IT vs. Addnode Group 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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