Correlation Between HEBA Fastighets and K Fast

Can any of the company-specific risk be diversified away by investing in both HEBA Fastighets 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 HEBA Fastighets and K Fast into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HEBA Fastighets AB and K Fast Holding AB, you can compare the effects of market volatilities on HEBA Fastighets 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 HEBA Fastighets with a short position of K Fast. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEBA Fastighets and K Fast.

Diversification Opportunities for HEBA Fastighets and K Fast

0.95

Correlation Coefficient

HEBA Fastighets  K Fast

Almost no diversification

The 3 months correlation between HEBA and KFAST-B is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding HEBA Fastighets AB 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 HEBA Fastighets 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 HEBA Fastighets AB 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 HEBA Fastighets i.e., HEBA Fastighets and K Fast go up and down completely randomly.

Pair Corralation between HEBA Fastighets and K Fast

Assuming the 90 days trading horizon HEBA Fastighets AB is expected to generate 0.74 times more return on investment than K Fast. However, HEBA Fastighets AB is 1.34 times less risky than K Fast. It trades about -0.07 of its potential returns per unit of risk. K Fast Holding AB is currently generating about -0.13 per unit of risk. If you would invest  3,450  in HEBA Fastighets AB on September 12, 2024 and sell it today you would lose (265.00) from holding HEBA Fastighets AB or give up 7.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

HEBA Fastighets AB  vs.  K Fast Holding AB

HEBA Fastighets AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEBA Fastighets AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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.

K Fast Holding

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with HEBA Fastighets and K Fast

The main advantage of trading using opposite HEBA Fastighets and K Fast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEBA Fastighets 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.

The idea behind HEBA Fastighets AB 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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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.