Correlation Between Kjell Group and 4C Group

Can any of the company-specific risk be diversified away by investing in both Kjell Group and 4C Group 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 Kjell Group and 4C Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kjell Group AB and 4C Group AB, you can compare the effects of market volatilities on Kjell Group and 4C Group 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 Kjell Group with a short position of 4C Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kjell Group and 4C Group.

Diversification Opportunities for Kjell Group and 4C Group

0.4

Correlation Coefficient

Kjell Group  4C Group

Very weak diversification

The 3 months correlation between Kjell and 4C Group is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Kjell Group AB and 4C Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4C Group AB and Kjell 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 Kjell Group AB are associated (or correlated) with 4C Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4C Group AB has no effect on the direction of Kjell Group i.e., Kjell Group and 4C Group go up and down completely randomly.

Pair Corralation between Kjell Group and 4C Group

Assuming the 90 days trading horizon Kjell Group is expected to generate 3.24 times less return on investment than 4C Group. In addition to that, Kjell Group is 1.44 times more volatile than 4C Group AB. It trades about 0.05 of its total potential returns per unit of risk. 4C Group AB is currently generating about 0.23 per unit of volatility. If you would invest  1,000.00  in 4C Group AB on December 22, 2024 and sell it today you would earn a total of  785.00  from holding 4C Group AB or generate 78.5% return on investment over 90 days.

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

Kjell Group AB  vs.  4C Group AB

Kjell Group AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kjell Group AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Kjell Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

4C Group AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 4C Group AB are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, 4C Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kjell Group and 4C Group

The main advantage of trading using opposite Kjell Group and 4C Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kjell Group position performs unexpectedly, 4C Group 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 4C Group will offset losses from the drop in 4C Group's long position.

The idea behind Kjell Group AB and 4C Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.