Correlation Between KABE Group and Nordic Waterproofing
Can any of the company-specific risk be diversified away by investing in both KABE Group and Nordic Waterproofing 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 Waterproofing 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 Waterproofing Holding, you can compare the effects of market volatilities on KABE Group and Nordic Waterproofing 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 Waterproofing. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Nordic Waterproofing.
Diversification Opportunities for KABE Group and Nordic Waterproofing
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KABE and Nordic is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Nordic Waterproofing Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Waterproofing 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 Waterproofing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Waterproofing has no effect on the direction of KABE Group i.e., KABE Group and Nordic Waterproofing go up and down completely randomly.
Pair Corralation between KABE Group and Nordic Waterproofing
Assuming the 90 days trading horizon KABE Group AB is expected to under-perform the Nordic Waterproofing. But the stock apears to be less risky and, when comparing its historical volatility, KABE Group AB is 1.22 times less risky than Nordic Waterproofing. The stock trades about -0.14 of its potential returns per unit of risk. The Nordic Waterproofing Holding is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 15,980 in Nordic Waterproofing Holding on August 30, 2024 and sell it today you would earn a total of 1,260 from holding Nordic Waterproofing Holding or generate 7.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KABE Group AB vs. Nordic Waterproofing Holding
Performance |
| Timeline |
| KABE Group AB |
| Nordic Waterproofing |
KABE Group and Nordic Waterproofing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KABE Group and Nordic Waterproofing
The main advantage of trading using opposite KABE Group and Nordic Waterproofing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Nordic Waterproofing 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 Waterproofing will offset losses from the drop in Nordic Waterproofing'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 Waterproofing vs. Inwido AB | Nordic Waterproofing vs. Byggmax Group AB | Nordic Waterproofing vs. AQ Group AB | Nordic Waterproofing vs. Garo 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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