Correlation Between Kollect On and Divio Technologies

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

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

Diversification Opportunities for Kollect On and Divio Technologies

-0.62

Correlation Coefficient

Kollect On  Divio Technologies

Excellent diversification

The 3 months correlation between Kollect and Divio is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Kollect on Demand and Divio Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Divio Technologies and Kollect On 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 Kollect on Demand are associated (or correlated) with Divio Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Divio Technologies has no effect on the direction of Kollect On i.e., Kollect On and Divio Technologies go up and down completely randomly.

Pair Corralation between Kollect On and Divio Technologies

Assuming the 90 days trading horizon Kollect on Demand is expected to generate 0.39 times more return on investment than Divio Technologies. However, Kollect on Demand is 2.56 times less risky than Divio Technologies. It trades about 0.17 of its potential returns per unit of risk. Divio Technologies AB is currently generating about 0.03 per unit of risk. If you would invest  74.00  in Kollect on Demand on September 24, 2024 and sell it today you would earn a total of  192.00  from holding Kollect on Demand or generate 259.46% return on investment over 90 days.

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

Kollect on Demand  vs.  Divio Technologies AB

Kollect on Demand

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kollect on Demand are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Kollect On unveiled solid returns over the last few months and may actually be approaching a breakup point.

Divio Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Divio Technologies AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward 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.

Pair Trading with Kollect On and Divio Technologies

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

The idea behind Kollect on Demand and Divio Technologies 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.