Correlation Between KABE Group and Evolution
Can any of the company-specific risk be diversified away by investing in both KABE Group and Evolution 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 Evolution 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 Evolution AB, you can compare the effects of market volatilities on KABE Group and Evolution 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 Evolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Evolution.
Diversification Opportunities for KABE Group and Evolution
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KABE and Evolution is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Evolution AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution 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 Evolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution AB has no effect on the direction of KABE Group i.e., KABE Group and Evolution go up and down completely randomly.
Pair Corralation between KABE Group and Evolution
Assuming the 90 days trading horizon KABE Group AB is expected to generate 1.09 times more return on investment than Evolution. However, KABE Group is 1.09 times more volatile than Evolution AB. It trades about 0.06 of its potential returns per unit of risk. Evolution AB is currently generating about 0.0 per unit of risk. If you would invest 18,596 in KABE Group AB on September 13, 2024 and sell it today you would earn a total of 11,204 from holding KABE Group AB or generate 60.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KABE Group AB vs. Evolution AB
Performance |
| Timeline |
| KABE Group AB |
| Evolution AB |
KABE Group and Evolution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KABE Group and Evolution
The main advantage of trading using opposite KABE Group and Evolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Evolution 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 Evolution will offset losses from the drop in Evolution'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 |
| Evolution vs. XMReality AB | Evolution vs. Enersize Oy | Evolution vs. Serstech AB | Evolution vs. KABE 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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