Correlation Between IZafe Group and Kollect On

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

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

Diversification Opportunities for IZafe Group and Kollect On

0.22

Correlation Coefficient

IZafe Group  Kollect On

Modest diversification

The 3 months correlation between IZafe and Kollect is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding iZafe Group AB and Kollect on Demand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kollect on Demand and IZafe Group 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 iZafe Group AB are associated (or correlated) with Kollect On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kollect on Demand has no effect on the direction of IZafe Group i.e., IZafe Group and Kollect On go up and down completely randomly.

Pair Corralation between IZafe Group and Kollect On

Assuming the 90 days trading horizon IZafe Group is expected to generate 1.48 times less return on investment than Kollect On. In addition to that, IZafe Group is 1.79 times more volatile than Kollect on Demand. It trades about 0.1 of its total potential returns per unit of risk. Kollect on Demand is currently generating about 0.25 per unit of volatility. If you would invest  250.00  in Kollect on Demand on October 13, 2024 and sell it today you would earn a total of  20.00  from holding Kollect on Demand or generate 8.0% return on investment over 90 days.

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

iZafe Group AB  vs.  Kollect on Demand

iZafe Group AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iZafe Group AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, IZafe Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Kollect on Demand

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kollect on Demand are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Kollect On may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with IZafe Group and Kollect On

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

The idea behind iZafe Group AB and Kollect on Demand 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.