Correlation Between Know IT and CellaVision
Can any of the company-specific risk be diversified away by investing in both Know IT and CellaVision 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 CellaVision 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 CellaVision AB, you can compare the effects of market volatilities on Know IT and CellaVision 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 CellaVision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Know IT and CellaVision.
Diversification Opportunities for Know IT and CellaVision
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Know and CellaVision is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Know IT AB and CellaVision AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CellaVision AB 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 CellaVision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CellaVision AB has no effect on the direction of Know IT i.e., Know IT and CellaVision go up and down completely randomly.
Pair Corralation between Know IT and CellaVision
Assuming the 90 days trading horizon Know IT AB is expected to generate 0.8 times more return on investment than CellaVision. However, Know IT AB is 1.26 times less risky than CellaVision. It trades about 0.01 of its potential returns per unit of risk. CellaVision AB is currently generating about -0.01 per unit of risk. If you would invest 14,181 in Know IT AB on November 3, 2024 and sell it today you would lose (321.00) from holding Know IT AB or give up 2.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Know IT AB vs. CellaVision AB
Performance |
| Timeline |
| Know IT AB |
| CellaVision AB |
Know IT and CellaVision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Know IT and CellaVision
The main advantage of trading using opposite Know IT and CellaVision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Know IT position performs unexpectedly, CellaVision 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 CellaVision will offset losses from the drop in CellaVision'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 |
| CellaVision vs. Vitrolife AB | CellaVision vs. Biotage AB | CellaVision vs. Sectra AB | CellaVision vs. BioGaia 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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