Correlation Between Kid ASA and Selvaag Bolig
Can any of the company-specific risk be diversified away by investing in both Kid ASA and Selvaag Bolig 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 Selvaag Bolig into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kid ASA and Selvaag Bolig ASA, you can compare the effects of market volatilities on Kid ASA and Selvaag Bolig 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 Selvaag Bolig. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kid ASA and Selvaag Bolig.
Diversification Opportunities for Kid ASA and Selvaag Bolig
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kid and Selvaag is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kid ASA and Selvaag Bolig ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selvaag Bolig 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 Selvaag Bolig. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selvaag Bolig ASA has no effect on the direction of Kid ASA i.e., Kid ASA and Selvaag Bolig go up and down completely randomly.
Pair Corralation between Kid ASA and Selvaag Bolig
Assuming the 90 days trading horizon Kid ASA is expected to generate 0.94 times more return on investment than Selvaag Bolig. However, Kid ASA is 1.06 times less risky than Selvaag Bolig. It trades about 0.09 of its potential returns per unit of risk. Selvaag Bolig ASA is currently generating about 0.06 per unit of risk. If you would invest 8,271 in Kid ASA on August 25, 2024 and sell it today you would earn a total of 4,169 from holding Kid ASA or generate 50.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kid ASA vs. Selvaag Bolig ASA
Performance |
| Timeline |
| Kid ASA |
| Selvaag Bolig ASA |
Kid ASA and Selvaag Bolig Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kid ASA and Selvaag Bolig
The main advantage of trading using opposite Kid ASA and Selvaag Bolig positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kid ASA position performs unexpectedly, Selvaag Bolig 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 Selvaag Bolig will offset losses from the drop in Selvaag Bolig's long position.| Kid ASA vs. Europris ASA | Kid ASA vs. Selvaag Bolig ASA | Kid ASA vs. Storebrand ASA | Kid ASA vs. Kitron ASA |
| Selvaag Bolig vs. Veidekke ASA | Selvaag Bolig vs. Entra ASA | Selvaag Bolig vs. Kid ASA | Selvaag Bolig vs. Olav Thon Eien |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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