Correlation Between KebNi AB and Unibap AB

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

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

Diversification Opportunities for KebNi AB and Unibap AB

-0.65

Correlation Coefficient

KebNi AB  Unibap AB

Excellent diversification

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

Pair Corralation between KebNi AB and Unibap AB

Assuming the 90 days trading horizon KebNi AB is expected to under-perform the Unibap AB. But the stock apears to be less risky and, when comparing its historical volatility, KebNi AB is 1.21 times less risky than Unibap AB. The stock trades about -0.08 of its potential returns per unit of risk. The Unibap AB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  264.00  in Unibap AB on September 25, 2024 and sell it today you would earn a total of  114.00  from holding Unibap AB or generate 43.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.22%
Values	Daily Returns

KebNi AB  vs.  Unibap 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.

Unibap AB

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unibap AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, Unibap AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KebNi AB and Unibap AB

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

The idea behind KebNi AB and Unibap 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.