Correlation Between Nexam Chemical and KABE Group
Can any of the company-specific risk be diversified away by investing in both Nexam Chemical 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 Nexam Chemical and KABE Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nexam Chemical Holding and KABE Group AB, you can compare the effects of market volatilities on Nexam Chemical 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 Nexam Chemical with a short position of KABE Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexam Chemical and KABE Group.
Diversification Opportunities for Nexam Chemical and KABE Group
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nexam and KABE is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Nexam Chemical Holding 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 Nexam Chemical 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 Nexam Chemical Holding 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 Nexam Chemical i.e., Nexam Chemical and KABE Group go up and down completely randomly.
Pair Corralation between Nexam Chemical and KABE Group
Assuming the 90 days trading horizon Nexam Chemical Holding is expected to generate 1.95 times more return on investment than KABE Group. However, Nexam Chemical is 1.95 times more volatile than KABE Group AB. It trades about 0.05 of its potential returns per unit of risk. KABE Group AB is currently generating about 0.03 per unit of risk. If you would invest 305.00 in Nexam Chemical Holding on August 27, 2024 and sell it today you would earn a total of 114.00 from holding Nexam Chemical Holding or generate 37.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexam Chemical Holding vs. KABE Group AB
Performance |
| Timeline |
| Nexam Chemical Holding |
| KABE Group AB |
Nexam Chemical and KABE Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexam Chemical and KABE Group
The main advantage of trading using opposite Nexam Chemical and KABE Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexam Chemical 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.| Nexam Chemical vs. Polygiene AB | Nexam Chemical vs. Svenska Aerogel Holding | Nexam Chemical vs. Organoclick AB | Nexam Chemical vs. Kancera 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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