Correlation Between KABE Group and Catella AB
Can any of the company-specific risk be diversified away by investing in both KABE Group and Catella AB 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 Catella AB 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 Catella AB, you can compare the effects of market volatilities on KABE Group and Catella AB 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 Catella AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Catella AB.
Diversification Opportunities for KABE Group and Catella AB
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KABE and Catella is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Catella AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catella AB 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 Catella AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catella AB has no effect on the direction of KABE Group i.e., KABE Group and Catella AB go up and down completely randomly.
Pair Corralation between KABE Group and Catella AB
Assuming the 90 days trading horizon KABE Group AB is expected to generate 1.26 times more return on investment than Catella AB. However, KABE Group is 1.26 times more volatile than Catella AB. It trades about -0.09 of its potential returns per unit of risk. Catella AB is currently generating about -0.34 per unit of risk. If you would invest 30,809 in KABE Group AB on September 13, 2024 and sell it today you would lose (1,009) from holding KABE Group AB or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KABE Group AB vs. Catella AB
Performance |
| Timeline |
| KABE Group AB |
| Catella AB |
KABE Group and Catella AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KABE Group and Catella AB
The main advantage of trading using opposite KABE Group and Catella AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Catella AB 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 Catella AB will offset losses from the drop in Catella AB'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 |
| Catella AB vs. Clas Ohlson AB | Catella AB vs. New Wave Group | Catella AB vs. Bilia AB | Catella AB vs. Inwido 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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