Correlation Between KABE Group and Bergman Beving

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

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

Diversification Opportunities for KABE Group and Bergman Beving

0.41

Correlation Coefficient

KABE Group  Bergman Beving

Very weak diversification

The 3 months correlation between KABE and Bergman is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Bergman Beving AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bergman Beving AB and KABE 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 KABE Group AB are associated (or correlated) with Bergman Beving. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bergman Beving AB has no effect on the direction of KABE Group i.e., KABE Group and Bergman Beving go up and down completely randomly.

Pair Corralation between KABE Group and Bergman Beving

Assuming the 90 days trading horizon KABE Group is expected to generate 4.99 times less return on investment than Bergman Beving. But when comparing it to its historical volatility, KABE Group AB is 2.19 times less risky than Bergman Beving. It trades about 0.11 of its potential returns per unit of risk. Bergman Beving AB is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  29,450  in Bergman Beving AB on October 5, 2024 and sell it today you would earn a total of  2,550  from holding Bergman Beving AB or generate 8.66% return on investment over 90 days.

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

KABE Group AB  vs.  Bergman Beving AB

KABE Group AB

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days KABE Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, KABE Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Bergman Beving AB

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Bergman Beving AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bergman Beving is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KABE Group and Bergman Beving

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

The idea behind KABE Group AB and Bergman Beving 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.