Correlation Between Industrivarden and KebNi AB

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

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

Diversification Opportunities for Industrivarden and KebNi AB

0.36

Correlation Coefficient

Industrivarden  KebNi AB

Weak diversification

The 3 months correlation between Industrivarden and KebNi is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Industrivarden AB ser and KebNi AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KebNi AB and Industrivarden 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 Industrivarden AB ser 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 Industrivarden i.e., Industrivarden and KebNi AB go up and down completely randomly.

Pair Corralation between Industrivarden and KebNi AB

Assuming the 90 days trading horizon Industrivarden AB ser is expected to under-perform the KebNi AB. But the stock apears to be less risky and, when comparing its historical volatility, Industrivarden AB ser is 5.48 times less risky than KebNi AB. The stock trades about -0.23 of its potential returns per unit of risk. The KebNi AB is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  94.00  in KebNi AB on September 26, 2024 and sell it today you would earn a total of  14.00  from holding KebNi AB or generate 14.89% return on investment over 90 days.

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

Industrivarden AB ser  vs.  KebNi AB

Industrivarden AB ser

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 Industrivarden and KebNi AB

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

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.