Correlation Between Schibsted ASA and Kitron ASA

Can any of the company-specific risk be diversified away by investing in both Schibsted 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 Schibsted 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 Schibsted ASA B and Kitron ASA, you can compare the effects of market volatilities on Schibsted 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 Schibsted ASA with a short position of Kitron ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schibsted ASA and Kitron ASA.

Diversification Opportunities for Schibsted ASA and Kitron ASA

0.56

Correlation Coefficient

Schibsted ASA  Kitron ASA

Very weak diversification

The 3 months correlation between Schibsted and Kitron is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Schibsted ASA B and Kitron ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kitron ASA and Schibsted 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 Schibsted ASA B 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 Schibsted ASA i.e., Schibsted ASA and Kitron ASA go up and down completely randomly.

Pair Corralation between Schibsted ASA and Kitron ASA

Assuming the 90 days trading horizon Schibsted ASA is expected to generate 3.28 times less return on investment than Kitron ASA. In addition to that, Schibsted ASA is 1.21 times more volatile than Kitron ASA. It trades about 0.05 of its total potential returns per unit of risk. Kitron ASA is currently generating about 0.19 per unit of volatility. If you would invest  2,860  in Kitron ASA on September 30, 2024 and sell it today you would earn a total of  556.00  from holding Kitron ASA or generate 19.44% return on investment over 90 days.

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

Schibsted ASA B  vs.  Kitron ASA

Schibsted ASA B

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Schibsted ASA B are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Schibsted ASA is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Kitron ASA

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kitron ASA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Kitron ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Schibsted ASA and Kitron ASA

The main advantage of trading using opposite Schibsted ASA and Kitron ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schibsted 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 Schibsted ASA B 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.