Correlation Between Kjell Group and NCAB

Can any of the company-specific risk be diversified away by investing in both Kjell Group and NCAB 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 NCAB 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 NCAB Group, you can compare the effects of market volatilities on Kjell Group and NCAB 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 NCAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kjell Group and NCAB.

Diversification Opportunities for Kjell Group and NCAB

0.29

Correlation Coefficient

Kjell Group  NCAB

Modest diversification

The 3 months correlation between Kjell and NCAB is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Kjell Group AB and NCAB Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCAB Group 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 NCAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCAB Group has no effect on the direction of Kjell Group i.e., Kjell Group and NCAB go up and down completely randomly.

Pair Corralation between Kjell Group and NCAB

Assuming the 90 days trading horizon Kjell Group AB is expected to under-perform the NCAB. In addition to that, Kjell Group is 1.31 times more volatile than NCAB Group. It trades about -0.17 of its total potential returns per unit of risk. NCAB Group is currently generating about -0.05 per unit of volatility. If you would invest  8,000  in NCAB Group on September 30, 2024 and sell it today you would lose (1,620) from holding NCAB Group or give up 20.25% of portfolio value over 90 days.

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

Kjell Group AB  vs.  NCAB Group

Kjell Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kjell Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

NCAB Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NCAB Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NCAB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kjell Group and NCAB

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

The idea behind Kjell Group AB and NCAB Group 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.