Correlation Between AB Sagax and K Fast

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

Diversification Opportunities for AB Sagax and K Fast

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between SAGA-B and KFAST-B is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding AB Sagax and K Fast Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Fast Holding and AB Sagax 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 AB Sagax are associated (or correlated) with K Fast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Fast Holding has no effect on the direction of AB Sagax i.e., AB Sagax and K Fast go up and down completely randomly.

Pair Corralation between AB Sagax and K Fast

Assuming the 90 days trading horizon AB Sagax is expected to generate 0.66 times more return on investment than K Fast. However, AB Sagax is 1.5 times less risky than K Fast. It trades about 0.01 of its potential returns per unit of risk. K Fast Holding AB is currently generating about 0.0 per unit of risk. If you would invest  24,706  in AB Sagax on September 3, 2024 and sell it today you would lose (546.00) from holding AB Sagax or give up 2.21% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

AB Sagax  vs.  K Fast Holding AB

 Performance 
       Timeline  
AB Sagax 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days AB Sagax has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
K Fast Holding 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days K Fast Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

AB Sagax and K Fast Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AB Sagax and K Fast

The main advantage of trading using opposite AB Sagax and K Fast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Sagax position performs unexpectedly, K Fast 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 K Fast will offset losses from the drop in K Fast's long position.
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The idea behind AB Sagax and K Fast Holding AB 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.
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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