Correlation Between Mekonomen and KABE Group
Can any of the company-specific risk be diversified away by investing in both Mekonomen and KABE Group 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 Mekonomen and KABE Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mekonomen AB and KABE Group AB, you can compare the effects of market volatilities on Mekonomen and KABE Group 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 Mekonomen with a short position of KABE Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mekonomen and KABE Group.
Diversification Opportunities for Mekonomen and KABE Group
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mekonomen and KABE is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Mekonomen AB and KABE Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KABE Group AB and Mekonomen 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 Mekonomen AB are associated (or correlated) with KABE Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KABE Group AB has no effect on the direction of Mekonomen i.e., Mekonomen and KABE Group go up and down completely randomly.
Pair Corralation between Mekonomen and KABE Group
Assuming the 90 days trading horizon Mekonomen AB is expected to generate 0.76 times more return on investment than KABE Group. However, Mekonomen AB is 1.31 times less risky than KABE Group. It trades about 0.02 of its potential returns per unit of risk. KABE Group AB is currently generating about -0.01 per unit of risk. If you would invest 13,080 in Mekonomen AB on November 7, 2024 and sell it today you would earn a total of 40.00 from holding Mekonomen AB or generate 0.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mekonomen AB vs. KABE Group AB
Performance |
| Timeline |
| Mekonomen AB |
| KABE Group AB |
Mekonomen and KABE Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mekonomen and KABE Group
The main advantage of trading using opposite Mekonomen and KABE Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mekonomen position performs unexpectedly, KABE Group 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 KABE Group will offset losses from the drop in KABE Group's long position.| Mekonomen vs. Clas Ohlson AB | Mekonomen vs. Bilia AB | Mekonomen vs. Byggmax Group AB | Mekonomen vs. Peab AB |
| KABE Group vs. Byggmax Group AB | KABE Group vs. Svedbergs i Dalstorp | KABE Group vs. Inwido AB | KABE Group vs. New Wave 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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