Correlation Between KABE Group and Genovis AB

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Can any of the company-specific risk be diversified away by investing in both KABE Group and Genovis 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 Genovis 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 Genovis AB, you can compare the effects of market volatilities on KABE Group and Genovis 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 Genovis AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Genovis AB.

Diversification Opportunities for KABE Group and Genovis AB

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between KABE and Genovis is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Genovis AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genovis 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 Genovis AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genovis AB has no effect on the direction of KABE Group i.e., KABE Group and Genovis AB go up and down completely randomly.

Pair Corralation between KABE Group and Genovis AB

Assuming the 90 days trading horizon KABE Group AB is expected to generate 0.56 times more return on investment than Genovis AB. However, KABE Group AB is 1.78 times less risky than Genovis AB. It trades about -0.09 of its potential returns per unit of risk. Genovis AB is currently generating about -0.08 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 Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

KABE Group AB  vs.  Genovis AB

 Performance 
       Timeline  
KABE Group AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days KABE Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, KABE Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
Genovis AB 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Genovis AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Genovis AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

KABE Group and Genovis AB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KABE Group and Genovis AB

The main advantage of trading using opposite KABE Group and Genovis AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Genovis 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 Genovis AB will offset losses from the drop in Genovis AB's long position.
The idea behind KABE Group AB and Genovis AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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