Correlation Between Know IT and Bredband2
Can any of the company-specific risk be diversified away by investing in both Know IT and Bredband2 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 Know IT and Bredband2 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Know IT AB and Bredband2 i Skandinavien, you can compare the effects of market volatilities on Know IT and Bredband2 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 Know IT with a short position of Bredband2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Know IT and Bredband2.
Diversification Opportunities for Know IT and Bredband2
Average diversification
The 3 months correlation between Know and Bredband2 is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Know IT AB and Bredband2 i Skandinavien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bredband2 i Skandinavien and Know IT 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 Know IT AB are associated (or correlated) with Bredband2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bredband2 i Skandinavien has no effect on the direction of Know IT i.e., Know IT and Bredband2 go up and down completely randomly.
Pair Corralation between Know IT and Bredband2
Assuming the 90 days trading horizon Know IT AB is expected to generate 1.66 times more return on investment than Bredband2. However, Know IT is 1.66 times more volatile than Bredband2 i Skandinavien. It trades about 0.26 of its potential returns per unit of risk. Bredband2 i Skandinavien is currently generating about -0.18 per unit of risk. If you would invest 13,264 in Know IT AB on September 13, 2024 and sell it today you would earn a total of 1,236 from holding Know IT AB or generate 9.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Know IT AB vs. Bredband2 i Skandinavien
Performance |
| Timeline |
| Know IT AB |
| Bredband2 i Skandinavien |
Know IT and Bredband2 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Know IT and Bredband2
The main advantage of trading using opposite Know IT and Bredband2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Know IT position performs unexpectedly, Bredband2 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 Bredband2 will offset losses from the drop in Bredband2's long position.| Know IT vs. Enea AB | Know IT vs. Lagercrantz Group AB | Know IT vs. Vitec Software Group | Know IT vs. Addnode Group AB |
| Bredband2 vs. Stillfront Group AB | Bredband2 vs. Paradox Interactive AB | Bredband2 vs. Catena Media plc | Bredband2 vs. Betsson 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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