Correlation Between Kid ASA and Arendals Fossekompani
Can any of the company-specific risk be diversified away by investing in both Kid ASA and Arendals Fossekompani 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 Arendals Fossekompani into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kid ASA and Arendals Fossekompani ASA, you can compare the effects of market volatilities on Kid ASA and Arendals Fossekompani 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 Arendals Fossekompani. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kid ASA and Arendals Fossekompani.
Diversification Opportunities for Kid ASA and Arendals Fossekompani
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kid and Arendals is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kid ASA and Arendals Fossekompani ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arendals Fossekompani ASA 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 Arendals Fossekompani. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arendals Fossekompani ASA has no effect on the direction of Kid ASA i.e., Kid ASA and Arendals Fossekompani go up and down completely randomly.
Pair Corralation between Kid ASA and Arendals Fossekompani
Assuming the 90 days trading horizon Kid ASA is expected to under-perform the Arendals Fossekompani. In addition to that, Kid ASA is 1.12 times more volatile than Arendals Fossekompani ASA. It trades about -0.34 of its total potential returns per unit of risk. Arendals Fossekompani ASA is currently generating about -0.15 per unit of volatility. If you would invest 15,723 in Arendals Fossekompani ASA on August 29, 2024 and sell it today you would lose (1,323) from holding Arendals Fossekompani ASA or give up 8.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kid ASA vs. Arendals Fossekompani ASA
Performance |
| Timeline |
| Kid ASA |
| Arendals Fossekompani ASA |
Kid ASA and Arendals Fossekompani Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kid ASA and Arendals Fossekompani
The main advantage of trading using opposite Kid ASA and Arendals Fossekompani positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kid ASA position performs unexpectedly, Arendals Fossekompani 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 Arendals Fossekompani will offset losses from the drop in Arendals Fossekompani's long position.| Kid ASA vs. Europris ASA | Kid ASA vs. Selvaag Bolig ASA | Kid ASA vs. Storebrand ASA | Kid ASA vs. Kitron ASA |
| Arendals Fossekompani vs. AF Gruppen ASA | Arendals Fossekompani vs. Aker ASA | Arendals Fossekompani vs. Kitron ASA | Arendals Fossekompani vs. Kongsberg Gruppen 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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