Correlation Between RVRC Holding and KABE Group
Can any of the company-specific risk be diversified away by investing in both RVRC Holding 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 RVRC Holding and KABE Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RVRC Holding AB and KABE Group AB, you can compare the effects of market volatilities on RVRC Holding 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 RVRC Holding with a short position of KABE Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of RVRC Holding and KABE Group.
Diversification Opportunities for RVRC Holding and KABE Group
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between RVRC and KABE is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding RVRC Holding 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 RVRC Holding 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 RVRC Holding 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 RVRC Holding i.e., RVRC Holding and KABE Group go up and down completely randomly.
Pair Corralation between RVRC Holding and KABE Group
Assuming the 90 days trading horizon RVRC Holding AB is expected to under-perform the KABE Group. In addition to that, RVRC Holding is 1.79 times more volatile than KABE Group AB. It trades about -0.12 of its total potential returns per unit of risk. KABE Group AB is currently generating about -0.13 per unit of volatility. If you would invest 31,994 in KABE Group AB on August 31, 2024 and sell it today you would lose (2,194) from holding KABE Group AB or give up 6.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
RVRC Holding AB vs. KABE Group AB
Performance |
| Timeline |
| RVRC Holding AB |
| KABE Group AB |
RVRC Holding and KABE Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RVRC Holding and KABE Group
The main advantage of trading using opposite RVRC Holding and KABE Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RVRC Holding 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.| RVRC Holding vs. AstraZeneca PLC | RVRC Holding vs. Investor AB ser | RVRC Holding vs. Investor AB ser | RVRC Holding vs. Atlas Copco 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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