Correlation Between KABE Group and Nordic Asia
Can any of the company-specific risk be diversified away by investing in both KABE Group and Nordic Asia 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 Nordic Asia 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 Nordic Asia Investment, you can compare the effects of market volatilities on KABE Group and Nordic Asia 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 Nordic Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Nordic Asia.
Diversification Opportunities for KABE Group and Nordic Asia
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between KABE and Nordic is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Nordic Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Asia Investment 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 Nordic Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Asia Investment has no effect on the direction of KABE Group i.e., KABE Group and Nordic Asia go up and down completely randomly.
Pair Corralation between KABE Group and Nordic Asia
Assuming the 90 days trading horizon KABE Group is expected to generate 1.03 times less return on investment than Nordic Asia. But when comparing it to its historical volatility, KABE Group AB is 3.24 times less risky than Nordic Asia. It trades about 0.17 of its potential returns per unit of risk. Nordic Asia Investment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 284.00 in Nordic Asia Investment on October 7, 2024 and sell it today you would earn a total of 6.00 from holding Nordic Asia Investment or generate 2.11% 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. Nordic Asia Investment
Performance |
| Timeline |
| KABE Group AB |
| Nordic Asia Investment |
KABE Group and Nordic Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KABE Group and Nordic Asia
The main advantage of trading using opposite KABE Group and Nordic Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Nordic Asia 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 Nordic Asia will offset losses from the drop in Nordic Asia'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 |
| Nordic Asia vs. L E Lundbergfretagen | Nordic Asia vs. Industrivarden AB ser | Nordic Asia vs. Svenska Handelsbanken AB | Nordic Asia vs. Investment AB Latour |
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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