Correlation Between Fabege AB and K2A Knaust
Can any of the company-specific risk be diversified away by investing in both Fabege AB and K2A Knaust 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 Fabege AB and K2A Knaust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabege AB and K2A Knaust Andersson, you can compare the effects of market volatilities on Fabege AB and K2A Knaust 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 Fabege AB with a short position of K2A Knaust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabege AB and K2A Knaust.
Diversification Opportunities for Fabege AB and K2A Knaust
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fabege and K2A is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Fabege AB and K2A Knaust Andersson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K2A Knaust Andersson and Fabege 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 Fabege AB are associated (or correlated) with K2A Knaust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K2A Knaust Andersson has no effect on the direction of Fabege AB i.e., Fabege AB and K2A Knaust go up and down completely randomly.
Pair Corralation between Fabege AB and K2A Knaust
Assuming the 90 days trading horizon Fabege AB is expected to under-perform the K2A Knaust. But the stock apears to be less risky and, when comparing its historical volatility, Fabege AB is 2.81 times less risky than K2A Knaust. The stock trades about -0.02 of its potential returns per unit of risk. The K2A Knaust Andersson is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 606.00 in K2A Knaust Andersson on September 1, 2024 and sell it today you would earn a total of 374.00 from holding K2A Knaust Andersson or generate 61.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fabege AB vs. K2A Knaust Andersson
Performance |
| Timeline |
| Fabege AB |
| K2A Knaust Andersson |
Fabege AB and K2A Knaust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fabege AB and K2A Knaust
The main advantage of trading using opposite Fabege AB and K2A Knaust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabege AB position performs unexpectedly, K2A Knaust 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 K2A Knaust will offset losses from the drop in K2A Knaust's long position.| Fabege AB vs. Castellum AB | Fabege AB vs. Fastighets AB Balder | Fabege AB vs. Wihlborgs Fastigheter AB | Fabege AB vs. Hufvudstaden AB |
| K2A Knaust vs. Fastighets AB Balder | K2A Knaust vs. Fabege AB | K2A Knaust vs. Wihlborgs Fastigheter AB | K2A Knaust vs. Castellum 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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