Correlation Between Orkla ASA and Kellanova
Can any of the company-specific risk be diversified away by investing in both Orkla ASA and Kellanova 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 Orkla ASA and Kellanova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orkla ASA and Kellanova, you can compare the effects of market volatilities on Orkla ASA and Kellanova 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 Orkla ASA with a short position of Kellanova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orkla ASA and Kellanova.
Diversification Opportunities for Orkla ASA and Kellanova
Poor diversification
The 3 months correlation between Orkla and Kellanova is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Orkla ASA and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and Orkla 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 Orkla ASA are associated (or correlated) with Kellanova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellanova has no effect on the direction of Orkla ASA i.e., Orkla ASA and Kellanova go up and down completely randomly.
Pair Corralation between Orkla ASA and Kellanova
Assuming the 90 days horizon Orkla ASA is expected to generate 1.55 times less return on investment than Kellanova. In addition to that, Orkla ASA is 1.27 times more volatile than Kellanova. It trades about 0.06 of its total potential returns per unit of risk. Kellanova is currently generating about 0.12 per unit of volatility. If you would invest 5,246 in Kellanova on September 4, 2024 and sell it today you would earn a total of 2,813 from holding Kellanova or generate 53.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 67.61% |
| Values | Daily Returns |
Orkla ASA vs. Kellanova
Performance |
| Timeline |
| Orkla ASA |
| Kellanova |
Orkla ASA and Kellanova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orkla ASA and Kellanova
The main advantage of trading using opposite Orkla ASA and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orkla ASA position performs unexpectedly, Kellanova 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 Kellanova will offset losses from the drop in Kellanova's long position.| Orkla ASA vs. Kellanova | Orkla ASA vs. Lancaster Colony | Orkla ASA vs. The A2 Milk | Orkla ASA vs. Artisan Consumer Goods |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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