Correlation Between K Fast and Fastighets

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

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

Diversification Opportunities for K Fast and Fastighets

0.56

Correlation Coefficient

K Fast  Fastighets

Very weak diversification

The 3 months correlation between KFAST-B and Fastighets is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding K Fast Holding AB and Fastighets AB Balder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastighets AB Balder and K Fast 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 K Fast Holding AB are associated (or correlated) with Fastighets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastighets AB Balder has no effect on the direction of K Fast i.e., K Fast and Fastighets go up and down completely randomly.

Pair Corralation between K Fast and Fastighets

Assuming the 90 days trading horizon K Fast Holding AB is expected to under-perform the Fastighets. In addition to that, K Fast is 1.14 times more volatile than Fastighets AB Balder. It trades about -0.11 of its total potential returns per unit of risk. Fastighets AB Balder is currently generating about 0.05 per unit of volatility. If you would invest  7,956  in Fastighets AB Balder on September 3, 2024 and sell it today you would earn a total of  436.00  from holding Fastighets AB Balder or generate 5.48% return on investment over 90 days.

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

K Fast Holding AB  vs.  Fastighets AB Balder

K Fast Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days K Fast Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Fastighets AB Balder

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fastighets AB Balder are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Fastighets is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with K Fast and Fastighets

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

The idea behind K Fast Holding AB and Fastighets AB Balder 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.