Correlation Between Arcticzymes Technologies and Kitron ASA

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

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

Diversification Opportunities for Arcticzymes Technologies and Kitron ASA

0.66

Correlation Coefficient

Arcticzymes Technologies  Kitron ASA

Poor diversification

The 3 months correlation between Arcticzymes and Kitron is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Arcticzymes Technologies ASA and Kitron ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kitron ASA and Arcticzymes Technologies 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 Arcticzymes Technologies 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 Arcticzymes Technologies i.e., Arcticzymes Technologies and Kitron ASA go up and down completely randomly.

Pair Corralation between Arcticzymes Technologies and Kitron ASA

Assuming the 90 days trading horizon Arcticzymes Technologies ASA is expected to generate 2.06 times more return on investment than Kitron ASA. However, Arcticzymes Technologies is 2.06 times more volatile than Kitron ASA. It trades about 0.16 of its potential returns per unit of risk. Kitron ASA is currently generating about 0.2 per unit of risk. If you would invest  1,324  in Arcticzymes Technologies ASA on December 1, 2024 and sell it today you would earn a total of  512.00  from holding Arcticzymes Technologies ASA or generate 38.67% return on investment over 90 days.

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

Arcticzymes Technologies ASA  vs.  Kitron ASA

Arcticzymes Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arcticzymes Technologies ASA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Arcticzymes Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Kitron ASA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kitron ASA are ranked lower than 15 (%) 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 Arcticzymes Technologies and Kitron ASA

The main advantage of trading using opposite Arcticzymes Technologies and Kitron ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arcticzymes Technologies 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 Arcticzymes Technologies 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.