Correlation Between KABE Group and Rottneros
Can any of the company-specific risk be diversified away by investing in both KABE Group and Rottneros 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 Rottneros 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 Rottneros AB, you can compare the effects of market volatilities on KABE Group and Rottneros 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 Rottneros. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Rottneros.
Diversification Opportunities for KABE Group and Rottneros
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KABE and Rottneros is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Rottneros AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rottneros 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 Rottneros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rottneros AB has no effect on the direction of KABE Group i.e., KABE Group and Rottneros go up and down completely randomly.
Pair Corralation between KABE Group and Rottneros
Assuming the 90 days trading horizon KABE Group AB is expected to generate 1.06 times more return on investment than Rottneros. However, KABE Group is 1.06 times more volatile than Rottneros AB. It trades about 0.03 of its potential returns per unit of risk. Rottneros AB is currently generating about -0.02 per unit of risk. If you would invest 25,938 in KABE Group AB on September 4, 2024 and sell it today you would earn a total of 2,862 from holding KABE Group AB or generate 11.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KABE Group AB vs. Rottneros AB
Performance |
| Timeline |
| KABE Group AB |
| Rottneros AB |
KABE Group and Rottneros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KABE Group and Rottneros
The main advantage of trading using opposite KABE Group and Rottneros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Rottneros 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 Rottneros will offset losses from the drop in Rottneros' 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 |
| Rottneros vs. BillerudKorsnas AB | Rottneros vs. SSAB AB | Rottneros vs. Svenska Cellulosa Aktiebolaget | Rottneros vs. Axfood 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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