Correlation Between Catena AB and K2A Knaust

Can any of the company-specific risk be diversified away by investing in both Catena AB and K2A Knaust 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 Catena AB and K2A Knaust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Catena AB and K2A Knaust Andersson, you can compare the effects of market volatilities on Catena AB and K2A Knaust 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 Catena AB with a short position of K2A Knaust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena AB and K2A Knaust.

Diversification Opportunities for Catena AB and K2A Knaust

-0.23

Correlation Coefficient

Catena AB  K2A Knaust

Very good diversification

The 3 months correlation between Catena and K2A is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Catena AB and K2A Knaust Andersson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K2A Knaust Andersson and Catena AB 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 Catena AB are associated (or correlated) with K2A Knaust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K2A Knaust Andersson has no effect on the direction of Catena AB i.e., Catena AB and K2A Knaust go up and down completely randomly.

Pair Corralation between Catena AB and K2A Knaust

Assuming the 90 days trading horizon Catena AB is expected to generate 1.14 times more return on investment than K2A Knaust. However, Catena AB is 1.14 times more volatile than K2A Knaust Andersson. It trades about 0.01 of its potential returns per unit of risk. K2A Knaust Andersson is currently generating about -0.2 per unit of risk. If you would invest  48,900  in Catena AB on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Catena AB or generate 0.0% return on investment over 90 days.

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

Catena AB  vs.  K2A Knaust Andersson

Catena AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catena 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.

K2A Knaust Andersson

Risk-Adjusted Performance

9 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in K2A Knaust Andersson are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, K2A Knaust exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Catena AB and K2A Knaust

The main advantage of trading using opposite Catena AB and K2A Knaust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena AB position performs unexpectedly, K2A Knaust 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 K2A Knaust will offset losses from the drop in K2A Knaust's long position.

The idea behind Catena AB and K2A Knaust Andersson 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.