Correlation Between Entra ASA and Kmc Properties

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

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

Diversification Opportunities for Entra ASA and Kmc Properties

-0.07

Correlation Coefficient

Entra ASA  Kmc Properties

Good diversification

The 3 months correlation between Entra and Kmc is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Entra ASA and Kmc Properties ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kmc Properties ASA and Entra 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 Entra ASA are associated (or correlated) with Kmc Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kmc Properties ASA has no effect on the direction of Entra ASA i.e., Entra ASA and Kmc Properties go up and down completely randomly.

Pair Corralation between Entra ASA and Kmc Properties

Assuming the 90 days trading horizon Entra ASA is expected to generate 32.48 times less return on investment than Kmc Properties. But when comparing it to its historical volatility, Entra ASA is 15.9 times less risky than Kmc Properties. It trades about 0.06 of its potential returns per unit of risk. Kmc Properties ASA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4.80  in Kmc Properties ASA on December 29, 2024 and sell it today you would earn a total of  2.20  from holding Kmc Properties ASA or generate 45.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Entra ASA  vs.  Kmc Properties ASA

Entra ASA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Entra ASA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Entra ASA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Kmc Properties ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kmc Properties ASA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Kmc Properties disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Entra ASA and Kmc Properties

The main advantage of trading using opposite Entra ASA and Kmc Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entra ASA position performs unexpectedly, Kmc Properties 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 Kmc Properties will offset losses from the drop in Kmc Properties' long position.

The idea behind Entra ASA and Kmc Properties 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.