Correlation Between Cloetta AB and Know IT

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

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

Diversification Opportunities for Cloetta AB and Know IT

0.42

Correlation Coefficient

Cloetta AB  Know IT

Very weak diversification

The 3 months correlation between Cloetta and Know is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cloetta 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 Cloetta 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 Cloetta 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 Cloetta AB i.e., Cloetta AB and Know IT go up and down completely randomly.

Pair Corralation between Cloetta AB and Know IT

Assuming the 90 days trading horizon Cloetta AB is expected to generate 1.12 times more return on investment than Know IT. However, Cloetta AB is 1.12 times more volatile than Know IT AB. It trades about 0.11 of its potential returns per unit of risk. Know IT AB is currently generating about 0.11 per unit of risk. If you would invest  2,520  in Cloetta AB on December 30, 2024 and sell it today you would earn a total of  348.00  from holding Cloetta AB or generate 13.81% return on investment over 90 days.

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

Cloetta AB  vs.  Know IT AB

Cloetta AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cloetta AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cloetta AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Know IT AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Know IT AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Know IT may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cloetta AB and Know IT

The main advantage of trading using opposite Cloetta AB and Know IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cloetta AB 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 Cloetta 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..