Correlation Between Catena Media and Kitron ASA
Can any of the company-specific risk be diversified away by investing in both Catena Media 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 Catena Media and Kitron ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catena Media plc and Kitron ASA, you can compare the effects of market volatilities on Catena Media 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 Catena Media with a short position of Kitron ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena Media and Kitron ASA.
Diversification Opportunities for Catena Media and Kitron ASA
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Catena and Kitron is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media plc and Kitron ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kitron ASA and Catena Media 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 Media plc 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 Catena Media i.e., Catena Media and Kitron ASA go up and down completely randomly.
Pair Corralation between Catena Media and Kitron ASA
Assuming the 90 days trading horizon Catena Media plc is expected to under-perform the Kitron ASA. In addition to that, Catena Media is 3.5 times more volatile than Kitron ASA. It trades about -0.1 of its total potential returns per unit of risk. Kitron ASA is currently generating about 0.0 per unit of volatility. If you would invest 3,046 in Kitron ASA on August 25, 2024 and sell it today you would lose (6.00) from holding Kitron ASA or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catena Media plc vs. Kitron ASA
Performance |
| Timeline |
| Catena Media plc |
| Kitron ASA |
Catena Media and Kitron ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catena Media and Kitron ASA
The main advantage of trading using opposite Catena Media and Kitron ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena Media 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.| Catena Media vs. XMReality AB | Catena Media vs. Enersize Oy | Catena Media vs. Mavshack publ AB | Catena Media vs. Serstech AB |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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