Correlation Between Avensia Publ and Kentima Holding

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

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

Diversification Opportunities for Avensia Publ and Kentima Holding

-0.13

Correlation Coefficient

Avensia Publ  Kentima Holding

Good diversification

The 3 months correlation between Avensia and Kentima is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Avensia publ AB and Kentima Holding publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentima Holding publ and Avensia Publ 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 Avensia publ AB are associated (or correlated) with Kentima Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kentima Holding publ has no effect on the direction of Avensia Publ i.e., Avensia Publ and Kentima Holding go up and down completely randomly.

Pair Corralation between Avensia Publ and Kentima Holding

Assuming the 90 days trading horizon Avensia publ AB is expected to generate 0.4 times more return on investment than Kentima Holding. However, Avensia publ AB is 2.51 times less risky than Kentima Holding. It trades about 0.16 of its potential returns per unit of risk. Kentima Holding publ is currently generating about 0.01 per unit of risk. If you would invest  796.00  in Avensia publ AB on December 30, 2024 and sell it today you would earn a total of  172.00  from holding Avensia publ AB or generate 21.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Avensia publ AB  vs.  Kentima Holding publ

Avensia publ AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Avensia publ AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Avensia Publ unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kentima Holding publ

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kentima Holding publ are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Kentima Holding is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Avensia Publ and Kentima Holding

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

The idea behind Avensia publ AB and Kentima Holding publ 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.