Correlation Between Tomra Systems and Kitron ASA
Can any of the company-specific risk be diversified away by investing in both Tomra Systems 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 Tomra Systems and Kitron ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tomra Systems ASA and Kitron ASA, you can compare the effects of market volatilities on Tomra Systems 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 Tomra Systems with a short position of Kitron ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tomra Systems and Kitron ASA.
Diversification Opportunities for Tomra Systems and Kitron ASA
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tomra and Kitron is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Tomra Systems ASA and Kitron ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kitron ASA and Tomra Systems 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 Tomra Systems 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 Tomra Systems i.e., Tomra Systems and Kitron ASA go up and down completely randomly.
Pair Corralation between Tomra Systems and Kitron ASA
Assuming the 90 days trading horizon Tomra Systems is expected to generate 5.28 times less return on investment than Kitron ASA. In addition to that, Tomra Systems is 2.02 times more volatile than Kitron ASA. It trades about 0.0 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 | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Tomra Systems ASA vs. Kitron ASA
Performance |
| Timeline |
| Tomra Systems ASA |
| Kitron ASA |
Tomra Systems and Kitron ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tomra Systems and Kitron ASA
The main advantage of trading using opposite Tomra Systems and Kitron ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tomra Systems 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.| Tomra Systems vs. Orkla ASA | Tomra Systems vs. Telenor ASA | Tomra Systems vs. Yara International ASA | Tomra Systems vs. SalMar ASA |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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