Correlation Between KABE Group and Midsummer
Can any of the company-specific risk be diversified away by investing in both KABE Group and Midsummer 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 Midsummer 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 Midsummer AB, you can compare the effects of market volatilities on KABE Group and Midsummer 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 Midsummer. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Midsummer.
Diversification Opportunities for KABE Group and Midsummer
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KABE and Midsummer is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Midsummer AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midsummer AB 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 Midsummer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midsummer AB has no effect on the direction of KABE Group i.e., KABE Group and Midsummer go up and down completely randomly.
Pair Corralation between KABE Group and Midsummer
Assuming the 90 days trading horizon KABE Group AB is expected to under-perform the Midsummer. But the stock apears to be less risky and, when comparing its historical volatility, KABE Group AB is 3.23 times less risky than Midsummer. The stock trades about -0.04 of its potential returns per unit of risk. The Midsummer AB is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 107.00 in Midsummer AB on September 15, 2024 and sell it today you would earn a total of 69.00 from holding Midsummer AB or generate 64.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.48% |
Values | Daily Returns |
KABE Group AB vs. Midsummer AB
Performance |
Timeline |
KABE Group AB |
Midsummer AB |
KABE Group and Midsummer Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KABE Group and Midsummer
The main advantage of trading using opposite KABE Group and Midsummer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Midsummer 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 Midsummer will offset losses from the drop in Midsummer's long position.KABE Group vs. Byggmax Group AB | ||
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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