Correlation Between KebNi AB and Alpcot Holding

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

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

Diversification Opportunities for KebNi AB and Alpcot Holding

0.55

Correlation Coefficient

KebNi AB  Alpcot Holding

Very weak diversification

The 3 months correlation between KebNi and Alpcot is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding KebNi AB and Alpcot Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpcot Holding AB and KebNi AB 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 KebNi AB are associated (or correlated) with Alpcot Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpcot Holding AB has no effect on the direction of KebNi AB i.e., KebNi AB and Alpcot Holding go up and down completely randomly.

Pair Corralation between KebNi AB and Alpcot Holding

Assuming the 90 days trading horizon KebNi AB is expected to under-perform the Alpcot Holding. But the stock apears to be less risky and, when comparing its historical volatility, KebNi AB is 1.46 times less risky than Alpcot Holding. The stock trades about -0.08 of its potential returns per unit of risk. The Alpcot Holding AB is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  79.00  in Alpcot Holding AB on September 25, 2024 and sell it today you would lose (19.00) from holding Alpcot Holding AB or give up 24.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

KebNi AB  vs.  Alpcot Holding AB

KebNi AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Alpcot Holding AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpcot Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Alpcot Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KebNi AB and Alpcot Holding

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

The idea behind KebNi AB and Alpcot Holding 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.