Correlation Between Zaptec AS and Kitron ASA
Can any of the company-specific risk be diversified away by investing in both Zaptec AS 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 Zaptec AS and Kitron ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zaptec AS and Kitron ASA, you can compare the effects of market volatilities on Zaptec AS 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 Zaptec AS with a short position of Kitron ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zaptec AS and Kitron ASA.
Diversification Opportunities for Zaptec AS and Kitron ASA
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zaptec and Kitron is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Zaptec AS and Kitron ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kitron ASA and Zaptec AS 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 Zaptec AS 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 Zaptec AS i.e., Zaptec AS and Kitron ASA go up and down completely randomly.
Pair Corralation between Zaptec AS and Kitron ASA
Assuming the 90 days trading horizon Zaptec AS is expected to under-perform the Kitron ASA. In addition to that, Zaptec AS is 3.67 times more volatile than Kitron ASA. It trades about -0.08 of its total potential returns per unit of risk. Kitron ASA is currently generating about 0.02 per unit of volatility. If you would invest 3,102 in Kitron ASA on August 30, 2024 and sell it today you would earn a total of 16.00 from holding Kitron ASA or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zaptec AS vs. Kitron ASA
Performance |
| Timeline |
| Zaptec AS |
| Kitron ASA |
Zaptec AS and Kitron ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zaptec AS and Kitron ASA
The main advantage of trading using opposite Zaptec AS and Kitron ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zaptec AS 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.The idea behind Zaptec AS and Kitron ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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