Correlation Between River Tech and Kraft Bank
Can any of the company-specific risk be diversified away by investing in both River Tech and Kraft Bank 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 River Tech and Kraft Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between River Tech plc and Kraft Bank Asa, you can compare the effects of market volatilities on River Tech and Kraft Bank 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 River Tech with a short position of Kraft Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of River Tech and Kraft Bank.
Diversification Opportunities for River Tech and Kraft Bank
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between River and Kraft is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding River Tech plc and Kraft Bank Asa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Bank Asa and River Tech 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 River Tech plc are associated (or correlated) with Kraft Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Bank Asa has no effect on the direction of River Tech i.e., River Tech and Kraft Bank go up and down completely randomly.
Pair Corralation between River Tech and Kraft Bank
Assuming the 90 days trading horizon River Tech plc is expected to generate 3.55 times more return on investment than Kraft Bank. However, River Tech is 3.55 times more volatile than Kraft Bank Asa. It trades about 0.11 of its potential returns per unit of risk. Kraft Bank Asa is currently generating about -0.06 per unit of risk. If you would invest 1,820 in River Tech plc on September 5, 2024 and sell it today you would earn a total of 260.00 from holding River Tech plc or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
River Tech plc vs. Kraft Bank Asa
Performance |
| Timeline |
| River Tech plc |
| Kraft Bank Asa |
River Tech and Kraft Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with River Tech and Kraft Bank
The main advantage of trading using opposite River Tech and Kraft Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if River Tech position performs unexpectedly, Kraft Bank 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 Kraft Bank will offset losses from the drop in Kraft Bank's long position.| River Tech vs. Huddlestock Fintech As | River Tech vs. Xplora Technologies As | River Tech vs. Ocean Sun As | River Tech vs. Polight ASA |
| Kraft Bank vs. Morrow Bank ASA | Kraft Bank vs. Napatech AS | Kraft Bank vs. Polaris Media | Kraft Bank vs. Odfjell Drilling |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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