Correlation Between CirChem AB and KebNi AB

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

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

Diversification Opportunities for CirChem AB and KebNi AB

-0.33

Correlation Coefficient

CirChem AB  KebNi AB

Very good diversification

The 3 months correlation between CirChem and KebNi is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding CirChem AB and KebNi AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KebNi AB and CirChem 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 CirChem AB are associated (or correlated) with KebNi AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KebNi AB has no effect on the direction of CirChem AB i.e., CirChem AB and KebNi AB go up and down completely randomly.

Pair Corralation between CirChem AB and KebNi AB

Assuming the 90 days trading horizon CirChem AB is expected to generate 4.74 times less return on investment than KebNi AB. In addition to that, CirChem AB is 1.16 times more volatile than KebNi AB. It trades about 0.0 of its total potential returns per unit of risk. KebNi AB is currently generating about 0.02 per unit of volatility. If you would invest  110.00  in KebNi AB on September 26, 2024 and sell it today you would lose (2.00) from holding KebNi AB or give up 1.82% of portfolio value over 90 days.

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

CirChem AB  vs.  KebNi AB

CirChem AB

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CirChem AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, CirChem AB sustained solid returns over the last few months and may actually be approaching a breakup point.

KebNi AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KebNi AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with CirChem AB and KebNi AB

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

The idea behind CirChem AB and KebNi 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.