Correlation Between Kitron ASA and Goodtech
Can any of the company-specific risk be diversified away by investing in both Kitron ASA and Goodtech 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 Kitron ASA and Goodtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kitron ASA and Goodtech, you can compare the effects of market volatilities on Kitron ASA and Goodtech 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 Kitron ASA with a short position of Goodtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kitron ASA and Goodtech.
Diversification Opportunities for Kitron ASA and Goodtech
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kitron and Goodtech is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Kitron ASA and Goodtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodtech and Kitron 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 Kitron ASA are associated (or correlated) with Goodtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodtech has no effect on the direction of Kitron ASA i.e., Kitron ASA and Goodtech go up and down completely randomly.
Pair Corralation between Kitron ASA and Goodtech
Assuming the 90 days trading horizon Kitron ASA is expected to under-perform the Goodtech. But the stock apears to be less risky and, when comparing its historical volatility, Kitron ASA is 1.07 times less risky than Goodtech. The stock trades about -0.02 of its potential returns per unit of risk. The Goodtech is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 914.00 in Goodtech on August 26, 2024 and sell it today you would lose (6.00) from holding Goodtech or give up 0.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kitron ASA vs. Goodtech
Performance |
| Timeline |
| Kitron ASA |
| Goodtech |
Kitron ASA and Goodtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kitron ASA and Goodtech
The main advantage of trading using opposite Kitron ASA and Goodtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kitron ASA position performs unexpectedly, Goodtech 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 Goodtech will offset losses from the drop in Goodtech's long position.| Kitron ASA vs. Europris ASA | Kitron ASA vs. Kongsberg Gruppen ASA | Kitron ASA vs. Nordic Semiconductor ASA | Kitron ASA vs. Storebrand ASA |
| Goodtech vs. Eidesvik Offshore ASA | Goodtech vs. Borgestad A | Goodtech vs. Kitron ASA | Goodtech vs. Havila Shipping 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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