Correlation Between Catena AB and Fabege AB

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

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

Diversification Opportunities for Catena AB and Fabege AB

0.02

Correlation Coefficient

Catena AB  Fabege AB

Significant diversification

The 3 months correlation between Catena and Fabege is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Catena AB and Fabege AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabege AB and Catena AB 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 Catena AB are associated (or correlated) with Fabege AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabege AB has no effect on the direction of Catena AB i.e., Catena AB and Fabege AB go up and down completely randomly.

Pair Corralation between Catena AB and Fabege AB

Assuming the 90 days trading horizon Catena AB is expected to under-perform the Fabege AB. In addition to that, Catena AB is 1.01 times more volatile than Fabege AB. It trades about -0.14 of its total potential returns per unit of risk. Fabege AB is currently generating about 0.02 per unit of volatility. If you would invest  8,393  in Fabege AB on December 4, 2024 and sell it today you would earn a total of  87.00  from holding Fabege AB or generate 1.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.1%
Values	Daily Returns

Catena AB  vs.  Fabege AB

Catena AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Catena AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Fabege AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fabege AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fabege AB 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 Catena AB and Fabege AB

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

The idea behind Catena AB and Fabege 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.