Correlation Between Kid ASA and Atea ASA
Can any of the company-specific risk be diversified away by investing in both Kid ASA and Atea 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 Kid ASA and Atea ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kid ASA and Atea ASA, you can compare the effects of market volatilities on Kid ASA and Atea 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 Kid ASA with a short position of Atea ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kid ASA and Atea ASA.
Diversification Opportunities for Kid ASA and Atea ASA
Weak diversification
The 3 months correlation between Kid and Atea is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Kid ASA and Atea ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atea 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 Atea ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atea ASA has no effect on the direction of Kid ASA i.e., Kid ASA and Atea ASA go up and down completely randomly.
Pair Corralation between Kid ASA and Atea ASA
Assuming the 90 days trading horizon Kid ASA is expected to under-perform the Atea ASA. In addition to that, Kid ASA is 1.78 times more volatile than Atea ASA. It trades about -0.1 of its total potential returns per unit of risk. Atea ASA is currently generating about -0.05 per unit of volatility. If you would invest 13,634 in Atea ASA on September 4, 2024 and sell it today you would lose (234.00) from holding Atea ASA or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kid ASA vs. Atea ASA
Performance |
| Timeline |
| Kid ASA |
| Atea ASA |
Kid ASA and Atea ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kid ASA and Atea ASA
The main advantage of trading using opposite Kid ASA and Atea ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kid ASA position performs unexpectedly, Atea 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 Atea ASA will offset losses from the drop in Atea ASA's long position.| Kid ASA vs. Europris ASA | Kid ASA vs. Selvaag Bolig ASA | Kid ASA vs. Storebrand ASA | Kid ASA vs. Kitron ASA |
| Atea ASA vs. Gjensidige Forsikring ASA | Atea ASA vs. Veidekke ASA | Atea ASA vs. Orkla ASA | Atea ASA vs. Aker 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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