Correlation Between Dometic Group and KABE Group
Can any of the company-specific risk be diversified away by investing in both Dometic Group 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 Dometic Group and KABE Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dometic Group AB and KABE Group AB, you can compare the effects of market volatilities on Dometic Group 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 Dometic Group with a short position of KABE Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dometic Group and KABE Group.
Diversification Opportunities for Dometic Group and KABE Group
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dometic and KABE is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dometic Group 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 Dometic Group 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 Dometic Group 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 Dometic Group i.e., Dometic Group and KABE Group go up and down completely randomly.
Pair Corralation between Dometic Group and KABE Group
Assuming the 90 days trading horizon Dometic Group AB is expected to generate 1.15 times more return on investment than KABE Group. However, Dometic Group is 1.15 times more volatile than KABE Group AB. It trades about -0.07 of its potential returns per unit of risk. KABE Group AB is currently generating about -0.09 per unit of risk. If you would invest 5,785 in Dometic Group AB on September 1, 2024 and sell it today you would lose (260.00) from holding Dometic Group AB or give up 4.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dometic Group AB vs. KABE Group AB
Performance |
| Timeline |
| Dometic Group AB |
| KABE Group AB |
Dometic Group and KABE Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dometic Group and KABE Group
The main advantage of trading using opposite Dometic Group and KABE Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dometic Group 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.| Dometic Group vs. AB SKF | Dometic Group vs. Tele2 AB | Dometic Group vs. Sandvik AB | Dometic Group vs. Skanska 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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