Correlation Between AddLife AB and KABE Group

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

Diversification Opportunities for AddLife AB and KABE Group

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between AddLife and KABE is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding AddLife 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 AddLife AB 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 AddLife 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 AddLife AB i.e., AddLife AB and KABE Group go up and down completely randomly.

Pair Corralation between AddLife AB and KABE Group

Assuming the 90 days trading horizon AddLife AB is expected to under-perform the KABE Group. In addition to that, AddLife AB is 1.27 times more volatile than KABE Group AB. It trades about -0.09 of its total potential returns per unit of risk. KABE Group AB is currently generating about -0.08 per unit of volatility. If you would invest  32,981  in KABE Group AB on September 6, 2024 and sell it today you would lose (3,181) from holding KABE Group AB or give up 9.64% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

AddLife AB  vs.  KABE Group AB

 Performance 
       Timeline  
AddLife AB 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

0 of 100

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

AddLife AB and KABE Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AddLife AB and KABE Group

The main advantage of trading using opposite AddLife AB and KABE Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AddLife AB 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.
The idea behind AddLife AB and KABE Group 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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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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