Correlation Between KABE Group and Svenska Aerogel
Can any of the company-specific risk be diversified away by investing in both KABE Group and Svenska Aerogel 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 KABE Group and Svenska Aerogel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KABE Group AB and Svenska Aerogel Holding, you can compare the effects of market volatilities on KABE Group and Svenska Aerogel 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 KABE Group with a short position of Svenska Aerogel. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Svenska Aerogel.
Diversification Opportunities for KABE Group and Svenska Aerogel
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KABE and Svenska is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Svenska Aerogel Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svenska Aerogel Holding and KABE 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 KABE Group AB are associated (or correlated) with Svenska Aerogel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Svenska Aerogel Holding has no effect on the direction of KABE Group i.e., KABE Group and Svenska Aerogel go up and down completely randomly.
Pair Corralation between KABE Group and Svenska Aerogel
Assuming the 90 days trading horizon KABE Group AB is expected to under-perform the Svenska Aerogel. But the stock apears to be less risky and, when comparing its historical volatility, KABE Group AB is 4.93 times less risky than Svenska Aerogel. The stock trades about -0.14 of its potential returns per unit of risk. The Svenska Aerogel Holding is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,070 in Svenska Aerogel Holding on August 30, 2024 and sell it today you would lose (30.00) from holding Svenska Aerogel Holding or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KABE Group AB vs. Svenska Aerogel Holding
Performance |
| Timeline |
| KABE Group AB |
| Svenska Aerogel Holding |
KABE Group and Svenska Aerogel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KABE Group and Svenska Aerogel
The main advantage of trading using opposite KABE Group and Svenska Aerogel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Svenska Aerogel 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 Svenska Aerogel will offset losses from the drop in Svenska Aerogel's long position.| KABE Group vs. Byggmax Group AB | KABE Group vs. Svedbergs i Dalstorp | KABE Group vs. Inwido AB | KABE Group vs. New Wave Group |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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