Correlation Between Diadrom Holding and Kentima Holding
Can any of the company-specific risk be diversified away by investing in both Diadrom Holding and Kentima Holding 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 Diadrom Holding and Kentima Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diadrom Holding AB and Kentima Holding publ, you can compare the effects of market volatilities on Diadrom Holding and Kentima Holding 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 Diadrom Holding with a short position of Kentima Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diadrom Holding and Kentima Holding.
Diversification Opportunities for Diadrom Holding and Kentima Holding
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Diadrom and Kentima is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Diadrom Holding AB and Kentima Holding publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentima Holding publ and Diadrom Holding 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 Diadrom Holding AB are associated (or correlated) with Kentima Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kentima Holding publ has no effect on the direction of Diadrom Holding i.e., Diadrom Holding and Kentima Holding go up and down completely randomly.
Pair Corralation between Diadrom Holding and Kentima Holding
Assuming the 90 days trading horizon Diadrom Holding AB is expected to under-perform the Kentima Holding. In addition to that, Diadrom Holding is 1.43 times more volatile than Kentima Holding publ. It trades about -0.01 of its total potential returns per unit of risk. Kentima Holding publ is currently generating about 0.11 per unit of volatility. If you would invest 200.00 in Kentima Holding publ on September 5, 2024 and sell it today you would earn a total of 12.00 from holding Kentima Holding publ or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diadrom Holding AB vs. Kentima Holding publ
Performance |
| Timeline |
| Diadrom Holding AB |
| Kentima Holding publ |
Diadrom Holding and Kentima Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diadrom Holding and Kentima Holding
The main advantage of trading using opposite Diadrom Holding and Kentima Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diadrom Holding position performs unexpectedly, Kentima Holding 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 Kentima Holding will offset losses from the drop in Kentima Holding's long position.| Diadrom Holding vs. Novotek AB | Diadrom Holding vs. Addnode Group AB | Diadrom Holding vs. Softronic AB | Diadrom Holding vs. CTT Systems AB |
| Kentima Holding vs. Generic Sweden publ | Kentima Holding vs. Diadrom Holding AB | Kentima Holding vs. JLT Mobile Computers | Kentima Holding vs. Avensia publ 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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