Correlation Between KebNi AB and Industrivarden

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

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

Diversification Opportunities for KebNi AB and Industrivarden

0.36

Correlation Coefficient

KebNi AB  Industrivarden

Weak diversification

The 3 months correlation between KebNi and Industrivarden is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding KebNi AB and Industrivarden AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrivarden AB ser 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 Industrivarden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrivarden AB ser has no effect on the direction of KebNi AB i.e., KebNi AB and Industrivarden go up and down completely randomly.

Pair Corralation between KebNi AB and Industrivarden

Assuming the 90 days trading horizon KebNi AB is expected to generate 5.61 times more return on investment than Industrivarden. However, KebNi AB is 5.61 times more volatile than Industrivarden AB ser. It trades about 0.2 of its potential returns per unit of risk. Industrivarden AB ser is currently generating about -0.17 per unit of risk. If you would invest  91.00  in KebNi AB on September 27, 2024 and sell it today you would earn a total of  17.00  from holding KebNi AB or generate 18.68% return on investment over 90 days.

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

KebNi AB  vs.  Industrivarden AB ser

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.

Industrivarden AB ser

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with KebNi AB and Industrivarden

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

The idea behind KebNi AB and Industrivarden AB ser 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.