Correlation Between Aker Carbon and Kitron ASA

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

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

Diversification Opportunities for Aker Carbon and Kitron ASA

-0.62

Correlation Coefficient

Aker Carbon  Kitron ASA

Excellent diversification

The 3 months correlation between Aker and Kitron is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aker Carbon Capture and Kitron ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kitron ASA and Aker Carbon 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 Aker Carbon Capture 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 Aker Carbon i.e., Aker Carbon and Kitron ASA go up and down completely randomly.

Pair Corralation between Aker Carbon and Kitron ASA

Assuming the 90 days trading horizon Aker Carbon Capture is expected to under-perform the Kitron ASA. In addition to that, Aker Carbon is 3.25 times more volatile than Kitron ASA. It trades about -0.06 of its total potential returns per unit of risk. Kitron ASA is currently generating about 0.18 per unit of volatility. If you would invest  3,382  in Kitron ASA on December 29, 2024 and sell it today you would earn a total of  1,042  from holding Kitron ASA or generate 30.81% return on investment over 90 days.

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

Aker Carbon Capture  vs.  Kitron ASA

Aker Carbon Capture

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aker Carbon Capture has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Kitron ASA

Risk-Adjusted Performance

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 Aker Carbon and Kitron ASA

The main advantage of trading using opposite Aker Carbon and Kitron ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker Carbon 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 Aker Carbon Capture 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 Stocks Directory module to find actively traded stocks across global markets.