Correlation Between KABE Group and Dow Jones
Can any of the company-specific risk be diversified away by investing in both KABE Group and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on KABE Group and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Dow Jones.
Diversification Opportunities for KABE Group and Dow Jones
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KABE and Dow is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of KABE Group i.e., KABE Group and Dow Jones go up and down completely randomly.
Pair Corralation between KABE Group and Dow Jones
Assuming the 90 days trading horizon KABE Group AB is expected to generate 2.82 times more return on investment than Dow Jones. However, KABE Group is 2.82 times more volatile than Dow Jones Industrial. It trades about 0.05 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of risk. If you would invest 19,702 in KABE Group AB on August 31, 2024 and sell it today you would earn a total of 10,098 from holding KABE Group AB or generate 51.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
KABE Group AB vs. Dow Jones Industrial
Performance |
| Timeline |
KABE Group and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
KABE Group AB
Pair trading matchups for KABE Group
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with KABE Group and Dow Jones
The main advantage of trading using opposite KABE Group and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' 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 |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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