Correlation Between Norske Skog and Kitron ASA
Can any of the company-specific risk be diversified away by investing in both Norske Skog 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 Norske Skog and Kitron ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norske Skog Asa and Kitron ASA, you can compare the effects of market volatilities on Norske Skog 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 Norske Skog with a short position of Kitron ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norske Skog and Kitron ASA.
Diversification Opportunities for Norske Skog and Kitron ASA
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Norske and Kitron is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Norske Skog Asa and Kitron ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kitron ASA and Norske Skog 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 Norske Skog 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 Norske Skog i.e., Norske Skog and Kitron ASA go up and down completely randomly.
Pair Corralation between Norske Skog and Kitron ASA
Assuming the 90 days trading horizon Norske Skog Asa is expected to under-perform the Kitron ASA. In addition to that, Norske Skog is 3.29 times more volatile than Kitron ASA. It trades about -0.04 of its total potential returns per unit of risk. Kitron ASA is currently generating about 0.03 per unit of volatility. If you would invest 3,124 in Kitron ASA on September 1, 2024 and sell it today you would earn a total of 26.00 from holding Kitron ASA or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Norske Skog Asa vs. Kitron ASA
Performance |
| Timeline |
| Norske Skog Asa |
| Kitron ASA |
Norske Skog and Kitron ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norske Skog and Kitron ASA
The main advantage of trading using opposite Norske Skog and Kitron ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norske Skog 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.| Norske Skog vs. Hoegh Autoliners ASA | Norske Skog vs. Reach Subsea | Norske Skog vs. Elkem ASA | Norske Skog vs. Integrated Wind Solutions |
| Kitron ASA vs. Europris ASA | Kitron ASA vs. Kongsberg Gruppen ASA | Kitron ASA vs. Nordic Semiconductor ASA | Kitron ASA vs. Storebrand 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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