Correlation Between Kid ASA and Otello ASA
Can any of the company-specific risk be diversified away by investing in both Kid ASA and Otello 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 Otello 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 Otello ASA, you can compare the effects of market volatilities on Kid ASA and Otello 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 Otello ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kid ASA and Otello ASA.
Diversification Opportunities for Kid ASA and Otello ASA
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kid and Otello is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Kid ASA and Otello ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otello 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 Otello ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otello ASA has no effect on the direction of Kid ASA i.e., Kid ASA and Otello ASA go up and down completely randomly.
Pair Corralation between Kid ASA and Otello ASA
Assuming the 90 days trading horizon Kid ASA is expected to generate 1.83 times more return on investment than Otello ASA. However, Kid ASA is 1.83 times more volatile than Otello ASA. It trades about 0.05 of its potential returns per unit of risk. Otello ASA is currently generating about -0.08 per unit of risk. If you would invest 14,426 in Kid ASA on November 2, 2024 and sell it today you would earn a total of 1,254 from holding Kid ASA or generate 8.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.04% |
| Values | Daily Returns |
Kid ASA vs. Otello ASA
Performance |
| Timeline |
| Kid ASA |
| Otello ASA |
Kid ASA and Otello ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kid ASA and Otello ASA
The main advantage of trading using opposite Kid ASA and Otello ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kid ASA position performs unexpectedly, Otello 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 Otello ASA will offset losses from the drop in Otello ASA's long position.| Kid ASA vs. Zaptec AS | Kid ASA vs. Norwegian Air Shuttle | Kid ASA vs. Elkem ASA | Kid ASA vs. Integrated Wind Solutions |
| Otello ASA vs. Kid ASA | Otello ASA vs. Selvaag Bolig ASA | Otello ASA vs. Wallenius Wilhelmsen Logistics | Otello ASA vs. Elkem 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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