Correlation Between KABE Group and Nilsson Special

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

Diversification Opportunities for KABE Group and Nilsson Special

0.0

Correlation Coefficient

KABE Group  Nilsson Special

Pay attention - limited upside

The 3 months correlation between KABE and Nilsson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Nilsson Special Vehicles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nilsson Special Vehicles 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 Nilsson Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nilsson Special Vehicles has no effect on the direction of KABE Group i.e., KABE Group and Nilsson Special go up and down completely randomly.

Pair Corralation between KABE Group and Nilsson Special

Assuming the 90 days trading horizon KABE Group AB is expected to under-perform the Nilsson Special. But the stock apears to be less risky and, when comparing its historical volatility, KABE Group AB is 5.59 times less risky than Nilsson Special. The stock trades about -0.02 of its potential returns per unit of risk. The Nilsson Special Vehicles is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  278.00  in Nilsson Special Vehicles on December 2, 2024 and sell it today you would earn a total of  62.00  from holding Nilsson Special Vehicles or generate 22.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

KABE Group AB  vs.  Nilsson Special Vehicles

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 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.

Nilsson Special Vehicles

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nilsson Special Vehicles are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Nilsson Special unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KABE Group and Nilsson Special

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

The idea behind KABE Group AB and Nilsson Special Vehicles 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.