Correlation Between Kambi Group and Nepa AB

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

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

Diversification Opportunities for Kambi Group and Nepa AB

0.07

Correlation Coefficient

Kambi Group  Nepa AB

Significant diversification

The 3 months correlation between Kambi and Nepa is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Kambi Group PLC and Nepa AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nepa AB and Kambi 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 Kambi Group PLC are associated (or correlated) with Nepa AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nepa AB has no effect on the direction of Kambi Group i.e., Kambi Group and Nepa AB go up and down completely randomly.

Pair Corralation between Kambi Group and Nepa AB

Assuming the 90 days trading horizon Kambi Group PLC is expected to generate 0.83 times more return on investment than Nepa AB. However, Kambi Group PLC is 1.2 times less risky than Nepa AB. It trades about 0.05 of its potential returns per unit of risk. Nepa AB is currently generating about -0.02 per unit of risk. If you would invest  9,890  in Kambi Group PLC on October 22, 2024 and sell it today you would earn a total of  2,370  from holding Kambi Group PLC or generate 23.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.56%
Values	Daily Returns

Kambi Group PLC  vs.  Nepa AB

Kambi Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kambi Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Nepa AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nepa AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Nepa AB may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kambi Group and Nepa AB

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

The idea behind Kambi Group PLC and Nepa 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.