Correlation Between Kentima Holding and Generic Sweden
Can any of the company-specific risk be diversified away by investing in both Kentima Holding and Generic Sweden 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 Kentima Holding and Generic Sweden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kentima Holding publ and Generic Sweden publ, you can compare the effects of market volatilities on Kentima Holding and Generic Sweden 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 Kentima Holding with a short position of Generic Sweden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kentima Holding and Generic Sweden.
Diversification Opportunities for Kentima Holding and Generic Sweden
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kentima and Generic is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Kentima Holding publ and Generic Sweden publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generic Sweden publ and Kentima Holding 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 Kentima Holding publ are associated (or correlated) with Generic Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generic Sweden publ has no effect on the direction of Kentima Holding i.e., Kentima Holding and Generic Sweden go up and down completely randomly.
Pair Corralation between Kentima Holding and Generic Sweden
Assuming the 90 days trading horizon Kentima Holding is expected to generate 1.09 times less return on investment than Generic Sweden. In addition to that, Kentima Holding is 2.68 times more volatile than Generic Sweden publ. It trades about 0.04 of its total potential returns per unit of risk. Generic Sweden publ is currently generating about 0.11 per unit of volatility. If you would invest 4,280 in Generic Sweden publ on September 5, 2024 and sell it today you would earn a total of 710.00 from holding Generic Sweden publ or generate 16.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kentima Holding publ vs. Generic Sweden publ
Performance |
| Timeline |
| Kentima Holding publ |
| Generic Sweden publ |
Kentima Holding and Generic Sweden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kentima Holding and Generic Sweden
The main advantage of trading using opposite Kentima Holding and Generic Sweden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kentima Holding position performs unexpectedly, Generic Sweden 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 Generic Sweden will offset losses from the drop in Generic Sweden's long position.| Kentima Holding vs. Generic Sweden publ | Kentima Holding vs. Diadrom Holding AB | Kentima Holding vs. JLT Mobile Computers | Kentima Holding vs. Avensia publ AB |
| Generic Sweden vs. Novotek AB | Generic Sweden vs. Addnode Group AB | Generic Sweden vs. Softronic AB | Generic Sweden vs. CTT Systems 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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