Correlation Between Smart Eye and KABE Group
Can any of the company-specific risk be diversified away by investing in both Smart Eye 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 Smart Eye and KABE Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart Eye AB and KABE Group AB, you can compare the effects of market volatilities on Smart Eye 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 Smart Eye with a short position of KABE Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Eye and KABE Group.
Diversification Opportunities for Smart Eye and KABE Group
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smart and KABE is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Smart Eye 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 Smart Eye 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 Smart Eye 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 Smart Eye i.e., Smart Eye and KABE Group go up and down completely randomly.
Pair Corralation between Smart Eye and KABE Group
Assuming the 90 days trading horizon Smart Eye AB is expected to under-perform the KABE Group. In addition to that, Smart Eye is 1.46 times more volatile than KABE Group AB. It trades about -0.13 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smart Eye AB vs. KABE Group AB
Performance |
| Timeline |
| Smart Eye AB |
| KABE Group AB |
Smart Eye and KABE Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smart Eye and KABE Group
The main advantage of trading using opposite Smart Eye and KABE Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart Eye 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.| Smart Eye vs. Catena Media plc | Smart Eye vs. Kambi Group PLC | Smart Eye vs. Betsson AB | Smart Eye vs. Invisio Communications 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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