Correlation Between Midsummer and Kollect On

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Can any of the company-specific risk be diversified away by investing in both Midsummer and Kollect On 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 Midsummer and Kollect On into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Midsummer AB and Kollect on Demand, you can compare the effects of market volatilities on Midsummer and Kollect On 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 Midsummer with a short position of Kollect On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midsummer and Kollect On.

Diversification Opportunities for Midsummer and Kollect On

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between Midsummer and Kollect is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Midsummer AB and Kollect on Demand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kollect on Demand and Midsummer 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 Midsummer AB are associated (or correlated) with Kollect On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kollect on Demand has no effect on the direction of Midsummer i.e., Midsummer and Kollect On go up and down completely randomly.

Pair Corralation between Midsummer and Kollect On

Assuming the 90 days trading horizon Midsummer is expected to generate 2.04 times less return on investment than Kollect On. In addition to that, Midsummer is 1.0 times more volatile than Kollect on Demand. It trades about 0.03 of its total potential returns per unit of risk. Kollect on Demand is currently generating about 0.05 per unit of volatility. If you would invest  169.00  in Kollect on Demand on September 24, 2024 and sell it today you would earn a total of  97.00  from holding Kollect on Demand or generate 57.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Midsummer AB  vs.  Kollect on Demand

 Performance 
       Timeline  
Midsummer AB 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Midsummer AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Midsummer unveiled solid returns over the last few months and may actually be approaching a breakup point.
Kollect on Demand 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Kollect on Demand are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Kollect On unveiled solid returns over the last few months and may actually be approaching a breakup point.

Midsummer and Kollect On Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Midsummer and Kollect On

The main advantage of trading using opposite Midsummer and Kollect On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midsummer position performs unexpectedly, Kollect On 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 Kollect On will offset losses from the drop in Kollect On's long position.
The idea behind Midsummer AB and Kollect on Demand 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.
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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