Correlation Between CAG Group and Know IT

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

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

Diversification Opportunities for CAG Group and Know IT

-0.49

Correlation Coefficient

CAG Group  Know IT

Very good diversification

The 3 months correlation between CAG and Know is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding CAG Group AB and Know IT AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Know IT AB and CAG 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 CAG Group AB are associated (or correlated) with Know IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Know IT AB has no effect on the direction of CAG Group i.e., CAG Group and Know IT go up and down completely randomly.

Pair Corralation between CAG Group and Know IT

Assuming the 90 days trading horizon CAG Group AB is expected to generate 0.65 times more return on investment than Know IT. However, CAG Group AB is 1.55 times less risky than Know IT. It trades about 0.05 of its potential returns per unit of risk. Know IT AB is currently generating about -0.02 per unit of risk. If you would invest  8,185  in CAG Group AB on September 24, 2024 and sell it today you would earn a total of  2,915  from holding CAG Group AB or generate 35.61% return on investment over 90 days.

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

CAG Group AB  vs.  Know IT AB

CAG Group AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CAG Group AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, CAG Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Know IT AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Know IT AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Know IT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CAG Group and Know IT

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

The idea behind CAG Group AB and Know IT 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.