Correlation Between KABE Group and Northgold
Can any of the company-specific risk be diversified away by investing in both KABE Group and Northgold 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 Northgold 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 Northgold AB, you can compare the effects of market volatilities on KABE Group and Northgold 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 Northgold. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Northgold.
Diversification Opportunities for KABE Group and Northgold
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KABE and Northgold is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Northgold AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northgold 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 Northgold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northgold AB has no effect on the direction of KABE Group i.e., KABE Group and Northgold go up and down completely randomly.
Pair Corralation between KABE Group and Northgold
Assuming the 90 days trading horizon KABE Group AB is expected to generate 0.26 times more return on investment than Northgold. However, KABE Group AB is 3.86 times less risky than Northgold. It trades about -0.03 of its potential returns per unit of risk. Northgold AB is currently generating about -0.14 per unit of risk. If you would invest 32,092 in KABE Group AB on August 29, 2024 and sell it today you would lose (2,692) from holding KABE Group AB or give up 8.39% 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. Northgold AB
Performance |
| Timeline |
| KABE Group AB |
| Northgold AB |
KABE Group and Northgold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KABE Group and Northgold
The main advantage of trading using opposite KABE Group and Northgold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Northgold 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 Northgold will offset losses from the drop in Northgold'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 |
| Northgold vs. Filo Mining Corp | Northgold vs. Arctic Gold Publ | Northgold vs. BE Group AB | Northgold vs. Africa Oil Corp |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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