Correlation Between Arendals Fossekompani and Kid ASA
Can any of the company-specific risk be diversified away by investing in both Arendals Fossekompani and Kid 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 Arendals Fossekompani and Kid ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arendals Fossekompani ASA and Kid ASA, you can compare the effects of market volatilities on Arendals Fossekompani and Kid 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 Arendals Fossekompani with a short position of Kid ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arendals Fossekompani and Kid ASA.
Diversification Opportunities for Arendals Fossekompani and Kid ASA
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arendals and Kid is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Arendals Fossekompani ASA and Kid ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kid ASA and Arendals Fossekompani 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 Arendals Fossekompani ASA are associated (or correlated) with Kid ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kid ASA has no effect on the direction of Arendals Fossekompani i.e., Arendals Fossekompani and Kid ASA go up and down completely randomly.
Pair Corralation between Arendals Fossekompani and Kid ASA
Assuming the 90 days trading horizon Arendals Fossekompani ASA is expected to generate 0.97 times more return on investment than Kid ASA. However, Arendals Fossekompani ASA is 1.04 times less risky than Kid ASA. It trades about -0.18 of its potential returns per unit of risk. Kid ASA is currently generating about -0.23 per unit of risk. If you would invest 15,901 in Arendals Fossekompani ASA on September 1, 2024 and sell it today you would lose (1,681) from holding Arendals Fossekompani ASA or give up 10.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arendals Fossekompani ASA vs. Kid ASA
Performance |
| Timeline |
| Arendals Fossekompani ASA |
| Kid ASA |
Arendals Fossekompani and Kid ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arendals Fossekompani and Kid ASA
The main advantage of trading using opposite Arendals Fossekompani and Kid ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arendals Fossekompani position performs unexpectedly, Kid 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 Kid ASA will offset losses from the drop in Kid ASA's long position.| Arendals Fossekompani vs. AF Gruppen ASA | Arendals Fossekompani vs. Aker ASA | Arendals Fossekompani vs. Kitron ASA | Arendals Fossekompani vs. Kongsberg Gruppen ASA |
| Kid ASA vs. Europris ASA | Kid ASA vs. Selvaag Bolig ASA | Kid ASA vs. Storebrand ASA | Kid ASA vs. Kitron 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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