Correlation Between KABE Group and MTI Investment

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

Diversification Opportunities for KABE Group and MTI Investment

0.14

Correlation Coefficient

KABE Group  MTI Investment

Average diversification

The 3 months correlation between KABE and MTI is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and MTI Investment SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTI Investment SE 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 MTI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTI Investment SE has no effect on the direction of KABE Group i.e., KABE Group and MTI Investment go up and down completely randomly.

Pair Corralation between KABE Group and MTI Investment

Assuming the 90 days trading horizon KABE Group AB is expected to generate 0.28 times more return on investment than MTI Investment. However, KABE Group AB is 3.63 times less risky than MTI Investment. It trades about -0.15 of its potential returns per unit of risk. MTI Investment SE is currently generating about -0.05 per unit of risk. If you would invest  30,000  in KABE Group AB on December 29, 2024 and sell it today you would lose (3,500) from holding KABE Group AB or give up 11.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

KABE Group AB  vs.  MTI Investment SE

KABE Group AB

Risk-Adjusted Performance

Very Weak

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

MTI Investment SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days MTI Investment SE 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 forward indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with KABE Group and MTI Investment

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

The idea behind KABE Group AB and MTI Investment SE 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.