Correlation Between NRC Group and Kitron ASA
Can any of the company-specific risk be diversified away by investing in both NRC Group and Kitron 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 NRC Group and Kitron ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRC Group ASA and Kitron ASA, you can compare the effects of market volatilities on NRC Group and Kitron 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 NRC Group with a short position of Kitron ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRC Group and Kitron ASA.
Diversification Opportunities for NRC Group and Kitron ASA
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NRC and Kitron is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding NRC Group ASA and Kitron ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kitron ASA and NRC Group 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 NRC Group ASA are associated (or correlated) with Kitron ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kitron ASA has no effect on the direction of NRC Group i.e., NRC Group and Kitron ASA go up and down completely randomly.
Pair Corralation between NRC Group and Kitron ASA
Assuming the 90 days trading horizon NRC Group ASA is expected to generate 2.59 times more return on investment than Kitron ASA. However, NRC Group is 2.59 times more volatile than Kitron ASA. It trades about 0.32 of its potential returns per unit of risk. Kitron ASA is currently generating about 0.04 per unit of risk. If you would invest 330.00 in NRC Group ASA on August 29, 2024 and sell it today you would earn a total of 98.00 from holding NRC Group ASA or generate 29.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NRC Group ASA vs. Kitron ASA
Performance |
| Timeline |
| NRC Group ASA |
| Kitron ASA |
NRC Group and Kitron ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NRC Group and Kitron ASA
The main advantage of trading using opposite NRC Group and Kitron ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRC Group position performs unexpectedly, Kitron 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 Kitron ASA will offset losses from the drop in Kitron ASA's long position.| NRC Group vs. Eidesvik Offshore ASA | NRC Group vs. Kitron ASA | NRC Group vs. Havila Shipping ASA | NRC Group vs. Elkem ASA |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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