Correlation Between K2A Knaust and John Mattson

Can any of the company-specific risk be diversified away by investing in both K2A Knaust and John Mattson 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 K2A Knaust and John Mattson into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between K2A Knaust Andersson and John Mattson Fastighetsforetagen, you can compare the effects of market volatilities on K2A Knaust and John Mattson 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 K2A Knaust with a short position of John Mattson. Check out your portfolio center. Please also check ongoing floating volatility patterns of K2A Knaust and John Mattson.

Diversification Opportunities for K2A Knaust and John Mattson

0.88

Correlation Coefficient

K2A Knaust  John Mattson

Very poor diversification

The 3 months correlation between K2A and John is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding K2A Knaust Andersson and John Mattson Fastighetsforetag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Mattson Fastigh and K2A Knaust 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 K2A Knaust Andersson are associated (or correlated) with John Mattson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Mattson Fastigh has no effect on the direction of K2A Knaust i.e., K2A Knaust and John Mattson go up and down completely randomly.

Pair Corralation between K2A Knaust and John Mattson

Assuming the 90 days trading horizon K2A Knaust Andersson is expected to under-perform the John Mattson. In addition to that, K2A Knaust is 2.52 times more volatile than John Mattson Fastighetsforetagen. It trades about -0.05 of its total potential returns per unit of risk. John Mattson Fastighetsforetagen is currently generating about -0.02 per unit of volatility. If you would invest  6,240  in John Mattson Fastighetsforetagen on September 12, 2024 and sell it today you would lose (140.00) from holding John Mattson Fastighetsforetagen or give up 2.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

K2A Knaust Andersson  vs.  John Mattson Fastighetsforetag

K2A Knaust Andersson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days K2A Knaust Andersson has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

John Mattson Fastigh

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Mattson Fastighetsforetagen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, John Mattson is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with K2A Knaust and John Mattson

The main advantage of trading using opposite K2A Knaust and John Mattson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K2A Knaust position performs unexpectedly, John Mattson 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 John Mattson will offset losses from the drop in John Mattson's long position.

The idea behind K2A Knaust Andersson and John Mattson Fastighetsforetagen 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..