Correlation Between KABE Group and Systemair

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

Diversification Opportunities for KABE Group and Systemair

-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between KABE and Systemair is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Systemair AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systemair 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 Systemair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Systemair AB has no effect on the direction of KABE Group i.e., KABE Group and Systemair go up and down completely randomly.

Pair Corralation between KABE Group and Systemair

Assuming the 90 days trading horizon KABE Group is expected to generate 2.26 times less return on investment than Systemair. But when comparing it to its historical volatility, KABE Group AB is 1.4 times less risky than Systemair. It trades about 0.02 of its potential returns per unit of risk. Systemair AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,550  in Systemair AB on October 5, 2024 and sell it today you would earn a total of  340.00  from holding Systemair AB or generate 3.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

KABE Group AB  vs.  Systemair AB

 Performance 
       Timeline  
KABE Group AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
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.
Systemair AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days Systemair AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Systemair is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

KABE Group and Systemair Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KABE Group and Systemair

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

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