Correlation Between KABE Group and Saab AB
Can any of the company-specific risk be diversified away by investing in both KABE Group and Saab 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 Saab 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 Saab AB, you can compare the effects of market volatilities on KABE Group and Saab 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 Saab AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Saab AB.
Diversification Opportunities for KABE Group and Saab AB
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KABE and Saab is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Saab AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saab 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 Saab AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saab AB has no effect on the direction of KABE Group i.e., KABE Group and Saab AB go up and down completely randomly.
Pair Corralation between KABE Group and Saab AB
Assuming the 90 days trading horizon KABE Group AB is expected to under-perform the Saab AB. But the stock apears to be less risky and, when comparing its historical volatility, KABE Group AB is 1.18 times less risky than Saab AB. The stock trades about -0.14 of its potential returns per unit of risk. The Saab AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 23,295 in Saab AB on August 30, 2024 and sell it today you would earn a total of 585.00 from holding Saab AB or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KABE Group AB vs. Saab AB
Performance |
| Timeline |
| KABE Group AB |
| Saab AB |
KABE Group and Saab AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KABE Group and Saab AB
The main advantage of trading using opposite KABE Group and Saab AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Saab 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 Saab AB will offset losses from the drop in Saab 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 |
| Saab AB vs. SSAB AB | Saab AB vs. Boliden AB | Saab AB vs. Sandvik AB | Saab AB vs. Telefonaktiebolaget LM Ericsson |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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