Correlation Between Ctek AB and Kjell Group

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

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

Diversification Opportunities for Ctek AB and Kjell Group

0.94

Correlation Coefficient

Ctek AB  Kjell Group

Almost no diversification

The 3 months correlation between Ctek and Kjell is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Ctek AB and Kjell Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kjell Group AB and Ctek 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 Ctek AB are associated (or correlated) with Kjell Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kjell Group AB has no effect on the direction of Ctek AB i.e., Ctek AB and Kjell Group go up and down completely randomly.

Pair Corralation between Ctek AB and Kjell Group

Assuming the 90 days trading horizon Ctek AB is expected to generate 0.82 times more return on investment than Kjell Group. However, Ctek AB is 1.22 times less risky than Kjell Group. It trades about -0.05 of its potential returns per unit of risk. Kjell Group AB is currently generating about -0.06 per unit of risk. If you would invest  3,592  in Ctek AB on September 29, 2024 and sell it today you would lose (2,192) from holding Ctek AB or give up 61.02% of portfolio value over 90 days.

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

Ctek AB  vs.  Kjell Group AB

Ctek AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kjell Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kjell Group 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ctek AB and Kjell Group

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

The idea behind Ctek AB and Kjell Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.