Correlation Between KABE Group and Ratos AB
Can any of the company-specific risk be diversified away by investing in both KABE Group and Ratos AB 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 Ratos AB 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 Ratos AB, you can compare the effects of market volatilities on KABE Group and Ratos AB 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 Ratos AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Ratos AB.
Diversification Opportunities for KABE Group and Ratos AB
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KABE and Ratos is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Ratos AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratos 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 Ratos AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratos AB has no effect on the direction of KABE Group i.e., KABE Group and Ratos AB go up and down completely randomly.
Pair Corralation between KABE Group and Ratos AB
Assuming the 90 days trading horizon KABE Group AB is expected to under-perform the Ratos AB. In addition to that, KABE Group is 1.16 times more volatile than Ratos AB. It trades about -0.13 of its total potential returns per unit of risk. Ratos AB is currently generating about -0.11 per unit of volatility. If you would invest 3,322 in Ratos AB on September 13, 2024 and sell it today you would lose (114.00) from holding Ratos AB or give up 3.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KABE Group AB vs. Ratos AB
Performance |
| Timeline |
| KABE Group AB |
| Ratos AB |
KABE Group and Ratos AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KABE Group and Ratos AB
The main advantage of trading using opposite KABE Group and Ratos AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Ratos AB 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 Ratos AB will offset losses from the drop in Ratos AB'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 |
| Ratos AB vs. Kinnevik Investment AB | Ratos AB vs. L E Lundbergfretagen | Ratos AB vs. Investment AB Latour | Ratos AB vs. Industrivarden AB ser |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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