Correlation Between Kid ASA and ABG Sundal
Can any of the company-specific risk be diversified away by investing in both Kid ASA and ABG Sundal 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 Kid ASA and ABG Sundal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kid ASA and ABG Sundal Collier, you can compare the effects of market volatilities on Kid ASA and ABG Sundal 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 Kid ASA with a short position of ABG Sundal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kid ASA and ABG Sundal.
Diversification Opportunities for Kid ASA and ABG Sundal
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kid and ABG is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Kid ASA and ABG Sundal Collier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABG Sundal Collier and Kid 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 Kid ASA are associated (or correlated) with ABG Sundal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABG Sundal Collier has no effect on the direction of Kid ASA i.e., Kid ASA and ABG Sundal go up and down completely randomly.
Pair Corralation between Kid ASA and ABG Sundal
Assuming the 90 days trading horizon Kid ASA is expected to under-perform the ABG Sundal. In addition to that, Kid ASA is 1.71 times more volatile than ABG Sundal Collier. It trades about -0.19 of its total potential returns per unit of risk. ABG Sundal Collier is currently generating about 0.08 per unit of volatility. If you would invest 660.00 in ABG Sundal Collier on August 29, 2024 and sell it today you would earn a total of 30.00 from holding ABG Sundal Collier or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kid ASA vs. ABG Sundal Collier
Performance |
| Timeline |
| Kid ASA |
| ABG Sundal Collier |
Kid ASA and ABG Sundal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kid ASA and ABG Sundal
The main advantage of trading using opposite Kid ASA and ABG Sundal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kid ASA position performs unexpectedly, ABG Sundal 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 ABG Sundal will offset losses from the drop in ABG Sundal's long position.| Kid ASA vs. Europris ASA | Kid ASA vs. Selvaag Bolig ASA | Kid ASA vs. Storebrand ASA | Kid ASA vs. Kitron ASA |
| ABG Sundal vs. Kid ASA | ABG Sundal vs. Selvaag Bolig ASA | ABG Sundal vs. Elkem ASA | ABG Sundal vs. Europris 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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