Correlation Between KABE Group and Simris Alg

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Can any of the company-specific risk be diversified away by investing in both KABE Group and Simris Alg 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 Simris Alg 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 Simris Alg AB, you can compare the effects of market volatilities on KABE Group and Simris Alg 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 Simris Alg. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Simris Alg.

Diversification Opportunities for KABE Group and Simris Alg

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between KABE and Simris is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Simris Alg AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simris Alg 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 Simris Alg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simris Alg AB has no effect on the direction of KABE Group i.e., KABE Group and Simris Alg go up and down completely randomly.

Pair Corralation between KABE Group and Simris Alg

Assuming the 90 days trading horizon KABE Group AB is expected to generate 0.31 times more return on investment than Simris Alg. However, KABE Group AB is 3.22 times less risky than Simris Alg. It trades about 0.04 of its potential returns per unit of risk. Simris Alg AB is currently generating about -0.04 per unit of risk. If you would invest  23,388  in KABE Group AB on September 4, 2024 and sell it today you would earn a total of  5,412  from holding KABE Group AB or generate 23.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

KABE Group AB  vs.  Simris Alg AB

 Performance 
       Timeline  
KABE Group AB 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days KABE Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Simris Alg AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Simris Alg AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KABE Group and Simris Alg Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KABE Group and Simris Alg

The main advantage of trading using opposite KABE Group and Simris Alg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Simris Alg 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 Simris Alg will offset losses from the drop in Simris Alg's long position.
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The idea behind KABE Group AB and Simris Alg AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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