Correlation Between Husqvarna and Kjell Group

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

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

Diversification Opportunities for Husqvarna and Kjell Group

0.87

Correlation Coefficient

Husqvarna  Kjell Group

Very poor diversification

The 3 months correlation between Husqvarna and Kjell is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Husqvarna 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 Husqvarna 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 Husqvarna 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 Husqvarna i.e., Husqvarna and Kjell Group go up and down completely randomly.

Pair Corralation between Husqvarna and Kjell Group

Assuming the 90 days trading horizon Husqvarna is expected to generate 20.73 times less return on investment than Kjell Group. But when comparing it to its historical volatility, Husqvarna AB is 4.62 times less risky than Kjell Group. It trades about 0.06 of its potential returns per unit of risk. Kjell Group AB is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  740.00  in Kjell Group AB on October 21, 2024 and sell it today you would earn a total of  208.00  from holding Kjell Group AB or generate 28.11% return on investment over 90 days.

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

Husqvarna AB  vs.  Kjell Group AB

Husqvarna AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Husqvarna and Kjell Group

The main advantage of trading using opposite Husqvarna and Kjell Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Husqvarna 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 Husqvarna 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.