Correlation Between Wilh Wilhelmsen and Kitron ASA

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

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

Diversification Opportunities for Wilh Wilhelmsen and Kitron ASA

-0.63

Correlation Coefficient

Wilh Wilhelmsen  Kitron ASA

Excellent diversification

The 3 months correlation between Wilh and Kitron is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Wilh Wilhelmsen Holding and Kitron ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kitron ASA and Wilh Wilhelmsen 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 Wilh Wilhelmsen Holding 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 Wilh Wilhelmsen i.e., Wilh Wilhelmsen and Kitron ASA go up and down completely randomly.

Pair Corralation between Wilh Wilhelmsen and Kitron ASA

Assuming the 90 days trading horizon Wilh Wilhelmsen Holding is expected to under-perform the Kitron ASA. But the stock apears to be less risky and, when comparing its historical volatility, Wilh Wilhelmsen Holding is 1.04 times less risky than Kitron ASA. The stock trades about -0.09 of its potential returns per unit of risk. The Kitron ASA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,116  in Kitron ASA on September 19, 2024 and sell it today you would earn a total of  234.00  from holding Kitron ASA or generate 7.51% return on investment over 90 days.

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

Wilh Wilhelmsen Holding  vs.  Kitron ASA

Wilh Wilhelmsen Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilh Wilhelmsen Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Kitron ASA

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kitron ASA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Kitron ASA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Wilh Wilhelmsen and Kitron ASA

The main advantage of trading using opposite Wilh Wilhelmsen and Kitron ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilh Wilhelmsen 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 Wilh Wilhelmsen Holding 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.