Correlation Between Kindred Group and Betsson AB

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

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

Diversification Opportunities for Kindred Group and Betsson AB

0.32

Correlation Coefficient

Kindred Group  Betsson AB

Weak diversification

The 3 months correlation between Kindred and Betsson is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Kindred Group plc and Betsson AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betsson AB and Kindred 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 Kindred Group plc are associated (or correlated) with Betsson AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betsson AB has no effect on the direction of Kindred Group i.e., Kindred Group and Betsson AB go up and down completely randomly.

Pair Corralation between Kindred Group and Betsson AB

Assuming the 90 days trading horizon Kindred Group is expected to generate 5.19 times less return on investment than Betsson AB. But when comparing it to its historical volatility, Kindred Group plc is 4.59 times less risky than Betsson AB. It trades about 0.08 of its potential returns per unit of risk. Betsson AB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  12,873  in Betsson AB on September 2, 2024 and sell it today you would earn a total of  1,095  from holding Betsson AB or generate 8.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	78.79%
Values	Daily Returns

Kindred Group plc  vs.  Betsson AB

Kindred Group plc

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Kindred Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Kindred Group is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Betsson AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Betsson AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Betsson AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kindred Group and Betsson AB

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

The idea behind Kindred Group plc and Betsson 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.