Correlation Between Kitron ASA and Hofseth Biocare
Can any of the company-specific risk be diversified away by investing in both Kitron ASA and Hofseth Biocare 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 Hofseth Biocare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kitron ASA and Hofseth Biocare ASA, you can compare the effects of market volatilities on Kitron ASA and Hofseth Biocare 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 Hofseth Biocare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kitron ASA and Hofseth Biocare.
Diversification Opportunities for Kitron ASA and Hofseth Biocare
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kitron and Hofseth is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kitron ASA and Hofseth Biocare ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hofseth Biocare ASA 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 Hofseth Biocare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hofseth Biocare ASA has no effect on the direction of Kitron ASA i.e., Kitron ASA and Hofseth Biocare go up and down completely randomly.
Pair Corralation between Kitron ASA and Hofseth Biocare
Assuming the 90 days trading horizon Kitron ASA is expected to generate 0.36 times more return on investment than Hofseth Biocare. However, Kitron ASA is 2.77 times less risky than Hofseth Biocare. It trades about -0.01 of its potential returns per unit of risk. Hofseth Biocare ASA is currently generating about -0.13 per unit of risk. If you would invest 3,048 in Kitron ASA on August 27, 2024 and sell it today you would lose (20.00) from holding Kitron ASA or give up 0.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kitron ASA vs. Hofseth Biocare ASA
Performance |
| Timeline |
| Kitron ASA |
| Hofseth Biocare ASA |
Kitron ASA and Hofseth Biocare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kitron ASA and Hofseth Biocare
The main advantage of trading using opposite Kitron ASA and Hofseth Biocare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kitron ASA position performs unexpectedly, Hofseth Biocare 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 Hofseth Biocare will offset losses from the drop in Hofseth Biocare'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 |
| Hofseth Biocare vs. Carasent ASA | Hofseth Biocare vs. Bergenbio ASA | Hofseth Biocare vs. Photocure | Hofseth Biocare 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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