Correlation Between KABE Group and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both KABE Group and Scandic Hotels 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 Scandic Hotels 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 Scandic Hotels Group, you can compare the effects of market volatilities on KABE Group and Scandic Hotels 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 Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Scandic Hotels.
Diversification Opportunities for KABE Group and Scandic Hotels
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KABE and Scandic is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Scandic Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandic Hotels Group 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 Scandic Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandic Hotels Group has no effect on the direction of KABE Group i.e., KABE Group and Scandic Hotels go up and down completely randomly.
Pair Corralation between KABE Group and Scandic Hotels
Assuming the 90 days trading horizon KABE Group AB is expected to under-perform the Scandic Hotels. In addition to that, KABE Group is 1.12 times more volatile than Scandic Hotels Group. It trades about -0.14 of its total potential returns per unit of risk. Scandic Hotels Group is currently generating about -0.04 per unit of volatility. If you would invest 7,040 in Scandic Hotels Group on September 12, 2024 and sell it today you would lose (100.00) from holding Scandic Hotels Group or give up 1.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
KABE Group AB vs. Scandic Hotels Group
Performance |
| Timeline |
| KABE Group AB |
| Scandic Hotels Group |
KABE Group and Scandic Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KABE Group and Scandic Hotels
The main advantage of trading using opposite KABE Group and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Scandic Hotels 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 Scandic Hotels will offset losses from the drop in Scandic Hotels' 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 |
| Scandic Hotels vs. H M Hennes | Scandic Hotels vs. Norwegian Air Shuttle | Scandic Hotels vs. KABE Group AB | Scandic Hotels vs. IAR Systems Group |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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