Correlation Between KABE Group and Profoto Holding
Can any of the company-specific risk be diversified away by investing in both KABE Group and Profoto Holding 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 Profoto Holding 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 Profoto Holding AB, you can compare the effects of market volatilities on KABE Group and Profoto Holding 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 Profoto Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Profoto Holding.
Diversification Opportunities for KABE Group and Profoto Holding
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KABE and Profoto is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Profoto Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profoto Holding 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 Profoto Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profoto Holding AB has no effect on the direction of KABE Group i.e., KABE Group and Profoto Holding go up and down completely randomly.
Pair Corralation between KABE Group and Profoto Holding
Assuming the 90 days trading horizon KABE Group AB is expected to generate 0.66 times more return on investment than Profoto Holding. However, KABE Group AB is 1.51 times less risky than Profoto Holding. It trades about -0.06 of its potential returns per unit of risk. Profoto Holding AB is currently generating about -0.06 per unit of risk. If you would invest 31,105 in KABE Group AB on August 25, 2024 and sell it today you would lose (1,105) from holding KABE Group AB or give up 3.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KABE Group AB vs. Profoto Holding AB
Performance |
| Timeline |
| KABE Group AB |
| Profoto Holding AB |
KABE Group and Profoto Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KABE Group and Profoto Holding
The main advantage of trading using opposite KABE Group and Profoto Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Profoto Holding 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 Profoto Holding will offset losses from the drop in Profoto Holding'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 |
| Profoto Holding vs. Awardit AB | Profoto Holding vs. RVRC Holding AB | Profoto Holding vs. Smart Eye AB | Profoto Holding 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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