Correlation Between KABE Group and Nexam Chemical
Can any of the company-specific risk be diversified away by investing in both KABE Group and Nexam Chemical 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 Nexam Chemical 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 Nexam Chemical Holding, you can compare the effects of market volatilities on KABE Group and Nexam Chemical 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 Nexam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Nexam Chemical.
Diversification Opportunities for KABE Group and Nexam Chemical
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KABE and Nexam is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Nexam Chemical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexam Chemical Holding 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 Nexam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexam Chemical Holding has no effect on the direction of KABE Group i.e., KABE Group and Nexam Chemical go up and down completely randomly.
Pair Corralation between KABE Group and Nexam Chemical
Assuming the 90 days trading horizon KABE Group AB is expected to under-perform the Nexam Chemical. But the stock apears to be less risky and, when comparing its historical volatility, KABE Group AB is 1.09 times less risky than Nexam Chemical. The stock trades about -0.1 of its potential returns per unit of risk. The Nexam Chemical Holding is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 440.00 in Nexam Chemical Holding on August 26, 2024 and sell it today you would lose (21.00) from holding Nexam Chemical Holding or give up 4.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KABE Group AB vs. Nexam Chemical Holding
Performance |
| Timeline |
| KABE Group AB |
| Nexam Chemical Holding |
KABE Group and Nexam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KABE Group and Nexam Chemical
The main advantage of trading using opposite KABE Group and Nexam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Nexam Chemical 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 Nexam Chemical will offset losses from the drop in Nexam Chemical'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 |
| Nexam Chemical vs. Svenska Aerogel Holding | Nexam Chemical vs. Kancera AB | Nexam Chemical vs. BIMobject AB | Nexam Chemical 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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