Correlation Between Kollect On and IZafe Group

Can any of the company-specific risk be diversified away by investing in both Kollect On and IZafe 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 Kollect On and IZafe Group 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 iZafe Group AB, you can compare the effects of market volatilities on Kollect On and IZafe 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 Kollect On with a short position of IZafe Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kollect On and IZafe Group.

Diversification Opportunities for Kollect On and IZafe Group

0.25

Correlation Coefficient

Kollect On  IZafe Group

Modest diversification

The 3 months correlation between Kollect and IZafe is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kollect on Demand and iZafe Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iZafe Group AB 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 IZafe Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iZafe Group AB has no effect on the direction of Kollect On i.e., Kollect On and IZafe Group go up and down completely randomly.

Pair Corralation between Kollect On and IZafe Group

Assuming the 90 days trading horizon Kollect On is expected to generate 1.24 times less return on investment than IZafe Group. But when comparing it to its historical volatility, Kollect on Demand is 2.41 times less risky than IZafe Group. It trades about 0.14 of its potential returns per unit of risk. iZafe Group AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  20.00  in iZafe Group AB on September 24, 2024 and sell it today you would earn a total of  1.00  from holding iZafe Group AB or generate 5.0% return on investment over 90 days.

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

Kollect on Demand  vs.  iZafe Group 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.

iZafe Group AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iZafe Group AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, IZafe Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kollect On and IZafe Group

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

The idea behind Kollect on Demand and iZafe 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.