Correlation Between Thule Group and Kjell Group

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

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

Diversification Opportunities for Thule Group and Kjell Group

-0.69

Correlation Coefficient

Thule Group  Kjell Group

Excellent diversification

The 3 months correlation between Thule and Kjell is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Thule Group AB and Kjell Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kjell Group AB and Thule 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 Thule Group AB are associated (or correlated) with Kjell Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kjell Group AB has no effect on the direction of Thule Group i.e., Thule Group and Kjell Group go up and down completely randomly.

Pair Corralation between Thule Group and Kjell Group

Assuming the 90 days trading horizon Thule Group AB is expected to generate 0.58 times more return on investment than Kjell Group. However, Thule Group AB is 1.74 times less risky than Kjell Group. It trades about 0.07 of its potential returns per unit of risk. Kjell Group AB is currently generating about -0.12 per unit of risk. If you would invest  25,834  in Thule Group AB on October 6, 2024 and sell it today you would earn a total of  8,706  from holding Thule Group AB or generate 33.7% return on investment over 90 days.

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

Thule Group AB  vs.  Kjell Group AB

Thule Group AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thule Group AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Thule Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Thule Group and Kjell Group

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

The idea behind Thule Group AB and Kjell 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.