Correlation Between K Fast and Dios Fastigheter

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

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

Diversification Opportunities for K Fast and Dios Fastigheter

0.84

Correlation Coefficient

K Fast  Dios Fastigheter

Very poor diversification

The 3 months correlation between KFAST-B and Dios is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding K Fast Holding AB and Dios Fastigheter AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dios Fastigheter and K Fast 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 K Fast Holding AB are associated (or correlated) with Dios Fastigheter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dios Fastigheter has no effect on the direction of K Fast i.e., K Fast and Dios Fastigheter go up and down completely randomly.

Pair Corralation between K Fast and Dios Fastigheter

Assuming the 90 days trading horizon K Fast Holding AB is expected to under-perform the Dios Fastigheter. In addition to that, K Fast is 1.39 times more volatile than Dios Fastigheter AB. It trades about -0.13 of its total potential returns per unit of risk. Dios Fastigheter AB is currently generating about -0.08 per unit of volatility. If you would invest  8,700  in Dios Fastigheter AB on September 12, 2024 and sell it today you would lose (725.00) from holding Dios Fastigheter AB or give up 8.33% of portfolio value over 90 days.

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

K Fast Holding AB  vs.  Dios Fastigheter AB

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.

Dios Fastigheter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dios Fastigheter AB 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.

Pair Trading with K Fast and Dios Fastigheter

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

The idea behind K Fast Holding AB and Dios Fastigheter 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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.