Correlation Between Nekkar Asa and Kitron ASA

Can any of the company-specific risk be diversified away by investing in both Nekkar Asa 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 Nekkar Asa and Kitron ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nekkar Asa and Kitron ASA, you can compare the effects of market volatilities on Nekkar Asa 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 Nekkar Asa with a short position of Kitron ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nekkar Asa and Kitron ASA.

Diversification Opportunities for Nekkar Asa and Kitron ASA

0.23

Correlation Coefficient

Nekkar Asa  Kitron ASA

Modest diversification

The 3 months correlation between Nekkar and Kitron is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Nekkar Asa and Kitron ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kitron ASA and Nekkar 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 Nekkar 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 Nekkar Asa i.e., Nekkar Asa and Kitron ASA go up and down completely randomly.

Pair Corralation between Nekkar Asa and Kitron ASA

Assuming the 90 days trading horizon Nekkar Asa is expected to under-perform the Kitron ASA. In addition to that, Nekkar Asa is 1.42 times more volatile than Kitron ASA. It trades about -0.03 of its total potential returns per unit of risk. Kitron ASA is currently generating about -0.01 per unit of volatility. If you would invest  3,238  in Kitron ASA on September 12, 2024 and sell it today you would lose (76.00) from holding Kitron ASA or give up 2.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nekkar Asa  vs.  Kitron ASA

Nekkar Asa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nekkar Asa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Nekkar Asa is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Kitron ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kitron ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Kitron ASA is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Nekkar Asa and Kitron ASA

The main advantage of trading using opposite Nekkar Asa and Kitron ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nekkar Asa 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 Nekkar Asa 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.