Correlation Between KABE Group and Industrivarden

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

By analyzing existing cross correlation between KABE Group AB and Industrivarden AB ser, you can compare the effects of market volatilities on KABE Group and Industrivarden 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 KABE Group with a short position of Industrivarden. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Industrivarden.

Diversification Opportunities for KABE Group and Industrivarden

-0.05

Correlation Coefficient

KABE Group  Industrivarden

Good diversification

The 3 months correlation between KABE and Industrivarden is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Industrivarden AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrivarden AB ser and KABE Group 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 KABE Group AB are associated (or correlated) with Industrivarden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrivarden AB ser has no effect on the direction of KABE Group i.e., KABE Group and Industrivarden go up and down completely randomly.

Pair Corralation between KABE Group and Industrivarden

Assuming the 90 days trading horizon KABE Group is expected to generate 11.63 times less return on investment than Industrivarden. In addition to that, KABE Group is 1.96 times more volatile than Industrivarden AB ser. It trades about 0.0 of its total potential returns per unit of risk. Industrivarden AB ser is currently generating about 0.05 per unit of volatility. If you would invest  32,230  in Industrivarden AB ser on September 13, 2024 and sell it today you would earn a total of  4,330  from holding Industrivarden AB ser or generate 13.43% return on investment over 90 days.

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

KABE Group AB  vs.  Industrivarden AB ser

KABE Group AB

Risk-Adjusted Performance

0 of 100

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 somewhat strong fundamental drivers, KABE Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Industrivarden AB ser

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Industrivarden AB ser are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Industrivarden is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KABE Group and Industrivarden

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

The idea behind KABE Group AB and Industrivarden AB ser 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..