Correlation Between KABE Group and Clean Motion
Can any of the company-specific risk be diversified away by investing in both KABE Group and Clean Motion 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 Clean Motion 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 Clean Motion AB, you can compare the effects of market volatilities on KABE Group and Clean Motion 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 Clean Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Clean Motion.
Diversification Opportunities for KABE Group and Clean Motion
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KABE and Clean is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Clean Motion AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Motion 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 Clean Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Motion AB has no effect on the direction of KABE Group i.e., KABE Group and Clean Motion go up and down completely randomly.
Pair Corralation between KABE Group and Clean Motion
Assuming the 90 days trading horizon KABE Group AB is expected to generate 0.27 times more return on investment than Clean Motion. However, KABE Group AB is 3.75 times less risky than Clean Motion. It trades about 0.03 of its potential returns per unit of risk. Clean Motion AB is currently generating about -0.02 per unit of risk. If you would invest 25,890 in KABE Group AB on August 29, 2024 and sell it today you would earn a total of 3,510 from holding KABE Group AB or generate 13.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KABE Group AB vs. Clean Motion AB
Performance |
| Timeline |
| KABE Group AB |
| Clean Motion AB |
KABE Group and Clean Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KABE Group and Clean Motion
The main advantage of trading using opposite KABE Group and Clean Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Clean Motion 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 Clean Motion will offset losses from the drop in Clean Motion'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 |
| Clean Motion vs. Doxa AB | Clean Motion vs. Cortus Energy AB | Clean Motion vs. Online Brands Nordic | Clean Motion vs. NetJobs Group 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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