Correlation Between Know IT and Midsona AB

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

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

Diversification Opportunities for Know IT and Midsona AB

0.32

Correlation Coefficient

Know IT  Midsona AB

Weak diversification

The 3 months correlation between Know and Midsona is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Know IT AB and Midsona AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midsona AB and Know IT 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 Know IT AB are associated (or correlated) with Midsona AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midsona AB has no effect on the direction of Know IT i.e., Know IT and Midsona AB go up and down completely randomly.

Pair Corralation between Know IT and Midsona AB

Assuming the 90 days trading horizon Know IT AB is expected to under-perform the Midsona AB. But the stock apears to be less risky and, when comparing its historical volatility, Know IT AB is 1.1 times less risky than Midsona AB. The stock trades about -0.12 of its potential returns per unit of risk. The Midsona AB is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  976.00  in Midsona AB on August 31, 2024 and sell it today you would lose (116.00) from holding Midsona AB or give up 11.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Know IT AB  vs.  Midsona AB

Know IT AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Know IT AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Midsona AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Midsona AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

Pair Trading with Know IT and Midsona AB

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

The idea behind Know IT AB and Midsona 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.