Correlation Between Kid ASA and Storebrand ASA
Can any of the company-specific risk be diversified away by investing in both Kid ASA and Storebrand 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 Storebrand 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 Storebrand ASA, you can compare the effects of market volatilities on Kid ASA and Storebrand 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 Storebrand ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kid ASA and Storebrand ASA.
Diversification Opportunities for Kid ASA and Storebrand ASA
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kid and Storebrand is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Kid ASA and Storebrand ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storebrand 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 Storebrand ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storebrand ASA has no effect on the direction of Kid ASA i.e., Kid ASA and Storebrand ASA go up and down completely randomly.
Pair Corralation between Kid ASA and Storebrand ASA
Assuming the 90 days trading horizon Kid ASA is expected to under-perform the Storebrand ASA. In addition to that, Kid ASA is 1.87 times more volatile than Storebrand ASA. It trades about -0.3 of its total potential returns per unit of risk. Storebrand ASA is currently generating about -0.09 per unit of volatility. If you would invest 12,700 in Storebrand ASA on August 25, 2024 and sell it today you would lose (370.00) from holding Storebrand ASA or give up 2.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kid ASA vs. Storebrand ASA
Performance |
| Timeline |
| Kid ASA |
| Storebrand ASA |
Kid ASA and Storebrand ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kid ASA and Storebrand ASA
The main advantage of trading using opposite Kid ASA and Storebrand ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kid ASA position performs unexpectedly, Storebrand 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 Storebrand ASA will offset losses from the drop in Storebrand 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 |
| Storebrand ASA vs. DnB ASA | Storebrand ASA vs. Gjensidige Forsikring ASA | Storebrand ASA vs. Orkla ASA | Storebrand ASA vs. Telenor 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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