Correlation Between KABE Group and L E
Can any of the company-specific risk be diversified away by investing in both KABE Group and L E 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 L E 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 L E Lundbergfretagen, you can compare the effects of market volatilities on KABE Group and L E 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 L E. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and L E.
Diversification Opportunities for KABE Group and L E
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KABE and LUND-B is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and L E Lundbergfretagen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L E Lundbergfretagen 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 L E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L E Lundbergfretagen has no effect on the direction of KABE Group i.e., KABE Group and L E go up and down completely randomly.
Pair Corralation between KABE Group and L E
Assuming the 90 days trading horizon KABE Group AB is expected to under-perform the L E. In addition to that, KABE Group is 2.26 times more volatile than L E Lundbergfretagen. It trades about -0.13 of its total potential returns per unit of risk. L E Lundbergfretagen is currently generating about -0.09 per unit of volatility. If you would invest 53,350 in L E Lundbergfretagen on August 31, 2024 and sell it today you would lose (1,150) from holding L E Lundbergfretagen or give up 2.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KABE Group AB vs. L E Lundbergfretagen
Performance |
| Timeline |
| KABE Group AB |
| L E Lundbergfretagen |
KABE Group and L E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KABE Group and L E
The main advantage of trading using opposite KABE Group and L E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, L E 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 L E will offset losses from the drop in L E'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 |
| L E vs. Investment AB Latour | L E vs. Industrivarden AB ser | L E vs. Kinnevik Investment AB | L E vs. Investor AB ser |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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