Correlation Between Kid ASA and Bouvet
Can any of the company-specific risk be diversified away by investing in both Kid ASA and Bouvet 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 Bouvet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kid ASA and Bouvet, you can compare the effects of market volatilities on Kid ASA and Bouvet 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 Bouvet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kid ASA and Bouvet.
Diversification Opportunities for Kid ASA and Bouvet
Pay attention - limited upside
The 3 months correlation between Kid and Bouvet is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Kid ASA and Bouvet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouvet 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 Bouvet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bouvet has no effect on the direction of Kid ASA i.e., Kid ASA and Bouvet go up and down completely randomly.
Pair Corralation between Kid ASA and Bouvet
Assuming the 90 days trading horizon Kid ASA is expected to under-perform the Bouvet. In addition to that, Kid ASA is 1.58 times more volatile than Bouvet. It trades about -0.08 of its total potential returns per unit of risk. Bouvet is currently generating about 0.06 per unit of volatility. If you would invest 6,874 in Bouvet on September 12, 2024 and sell it today you would earn a total of 296.00 from holding Bouvet or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kid ASA vs. Bouvet
Performance |
| Timeline |
| Kid ASA |
| Bouvet |
Kid ASA and Bouvet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kid ASA and Bouvet
The main advantage of trading using opposite Kid ASA and Bouvet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kid ASA position performs unexpectedly, Bouvet 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 Bouvet will offset losses from the drop in Bouvet's long position.| Kid ASA vs. Europris ASA | Kid ASA vs. Selvaag Bolig ASA | Kid ASA vs. Storebrand ASA | Kid ASA vs. Kitron 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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