Correlation Between Aker Carbon and Kitron ASA
Can any of the company-specific risk be diversified away by investing in both Aker Carbon and Kitron ASA 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 Aker Carbon and Kitron ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aker Carbon Capture and Kitron ASA, you can compare the effects of market volatilities on Aker Carbon and Kitron ASA 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 Aker Carbon with a short position of Kitron ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker Carbon and Kitron ASA.
Diversification Opportunities for Aker Carbon and Kitron ASA
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aker and Kitron is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aker Carbon Capture and Kitron ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kitron ASA and Aker Carbon 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 Aker Carbon Capture are associated (or correlated) with Kitron ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kitron ASA has no effect on the direction of Aker Carbon i.e., Aker Carbon and Kitron ASA go up and down completely randomly.
Pair Corralation between Aker Carbon and Kitron ASA
Assuming the 90 days trading horizon Aker Carbon Capture is expected to under-perform the Kitron ASA. In addition to that, Aker Carbon is 1.23 times more volatile than Kitron ASA. It trades about -0.23 of its total potential returns per unit of risk. Kitron ASA is currently generating about -0.01 per unit of volatility. If you would invest 3,048 in Kitron ASA on August 28, 2024 and sell it today you would lose (20.00) from holding Kitron ASA or give up 0.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aker Carbon Capture vs. Kitron ASA
Performance |
| Timeline |
| Aker Carbon Capture |
| Kitron ASA |
Aker Carbon and Kitron ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker Carbon and Kitron ASA
The main advantage of trading using opposite Aker Carbon and Kitron ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker Carbon position performs unexpectedly, Kitron ASA 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 Kitron ASA will offset losses from the drop in Kitron ASA's long position.The idea behind Aker Carbon Capture and Kitron ASA 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.| Kitron ASA vs. Europris ASA | Kitron ASA vs. Kongsberg Gruppen ASA | Kitron ASA vs. Nordic Semiconductor ASA | Kitron ASA vs. Storebrand ASA |
Check out your portfolio center.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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