Correlation Between KABE Group and Fabege AB

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Can any of the company-specific risk be diversified away by investing in both KABE Group and Fabege 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 KABE Group and Fabege AB 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 Fabege AB, you can compare the effects of market volatilities on KABE Group and Fabege 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 KABE Group with a short position of Fabege AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Fabege AB.

Diversification Opportunities for KABE Group and Fabege AB

-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between KABE and Fabege is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Fabege AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabege 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 Fabege AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabege AB has no effect on the direction of KABE Group i.e., KABE Group and Fabege AB go up and down completely randomly.

Pair Corralation between KABE Group and Fabege AB

Assuming the 90 days trading horizon KABE Group AB is expected to generate 1.1 times more return on investment than Fabege AB. However, KABE Group is 1.1 times more volatile than Fabege AB. It trades about 0.02 of its potential returns per unit of risk. Fabege AB is currently generating about -0.18 per unit of risk. If you would invest  29,821  in KABE Group AB on October 5, 2024 and sell it today you would earn a total of  479.00  from holding KABE Group AB or generate 1.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

KABE Group AB  vs.  Fabege AB

 Performance 
       Timeline  
KABE Group AB 

Risk-Adjusted Performance

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Strong
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.
Fabege AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fabege 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.

KABE Group and Fabege AB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KABE Group and Fabege AB

The main advantage of trading using opposite KABE Group and Fabege AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Fabege 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 Fabege AB will offset losses from the drop in Fabege AB's long position.
The idea behind KABE Group AB and Fabege 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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