Correlation Between KABE Group and Hufvudstaden
Can any of the company-specific risk be diversified away by investing in both KABE Group and Hufvudstaden 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 Hufvudstaden 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 Hufvudstaden AB, you can compare the effects of market volatilities on KABE Group and Hufvudstaden 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 Hufvudstaden. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Hufvudstaden.
Diversification Opportunities for KABE Group and Hufvudstaden
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between KABE and Hufvudstaden is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Hufvudstaden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hufvudstaden 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 Hufvudstaden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hufvudstaden AB has no effect on the direction of KABE Group i.e., KABE Group and Hufvudstaden go up and down completely randomly.
Pair Corralation between KABE Group and Hufvudstaden
Assuming the 90 days trading horizon KABE Group AB is expected to under-perform the Hufvudstaden. In addition to that, KABE Group is 1.08 times more volatile than Hufvudstaden AB. It trades about -0.14 of its total potential returns per unit of risk. Hufvudstaden AB is currently generating about 0.02 per unit of volatility. If you would invest 12,170 in Hufvudstaden AB on November 27, 2024 and sell it today you would earn a total of 30.00 from holding Hufvudstaden AB or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KABE Group AB vs. Hufvudstaden AB
Performance |
| Timeline |
| KABE Group AB |
| Hufvudstaden AB |
KABE Group and Hufvudstaden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KABE Group and Hufvudstaden
The main advantage of trading using opposite KABE Group and Hufvudstaden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Hufvudstaden 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 Hufvudstaden will offset losses from the drop in Hufvudstaden'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 |
| Hufvudstaden vs. Fabege AB | Hufvudstaden vs. Castellum AB | Hufvudstaden vs. Wallenstam AB | Hufvudstaden vs. Fastighets AB Balder |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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