Correlation Between Aker ASA and Kitron ASA
Can any of the company-specific risk be diversified away by investing in both Aker ASA 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 ASA 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 ASA and Kitron ASA, you can compare the effects of market volatilities on Aker ASA 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 ASA with a short position of Kitron ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker ASA and Kitron ASA.
Diversification Opportunities for Aker ASA and Kitron ASA
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aker and Kitron is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Aker ASA and Kitron ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kitron ASA and Aker ASA 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 ASA 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 ASA i.e., Aker ASA and Kitron ASA go up and down completely randomly.
Pair Corralation between Aker ASA and Kitron ASA
Assuming the 90 days trading horizon Aker ASA is expected to under-perform the Kitron ASA. But the stock apears to be less risky and, when comparing its historical volatility, Aker ASA is 1.63 times less risky than Kitron ASA. The stock trades about -0.01 of its potential returns per unit of risk. The Kitron ASA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,280 in Kitron ASA on August 26, 2024 and sell it today you would earn a total of 760.00 from holding Kitron ASA or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aker ASA vs. Kitron ASA
Performance |
| Timeline |
| Aker ASA |
| Kitron ASA |
Aker ASA and Kitron ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker ASA and Kitron ASA
The main advantage of trading using opposite Aker ASA and Kitron ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker ASA 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.| Aker ASA vs. Storebrand ASA | Aker ASA vs. Aker Solutions ASA | Aker ASA vs. DnB ASA | Aker ASA vs. Orkla ASA |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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