Correlation Between Hexagon Composites and Kitron ASA

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

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

Diversification Opportunities for Hexagon Composites and Kitron ASA

-0.4

Correlation Coefficient

Hexagon Composites  Kitron ASA

Very good diversification

The 3 months correlation between Hexagon and Kitron is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hexagon Composites ASA and Kitron ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kitron ASA and Hexagon Composites 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 Hexagon Composites 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 Hexagon Composites i.e., Hexagon Composites and Kitron ASA go up and down completely randomly.

Pair Corralation between Hexagon Composites and Kitron ASA

Assuming the 90 days trading horizon Hexagon Composites ASA is expected to generate 1.9 times more return on investment than Kitron ASA. However, Hexagon Composites is 1.9 times more volatile than Kitron ASA. It trades about 0.04 of its potential returns per unit of risk. Kitron ASA is currently generating about -0.05 per unit of risk. If you would invest  4,020  in Hexagon Composites ASA on August 31, 2024 and sell it today you would earn a total of  205.00  from holding Hexagon Composites ASA or generate 5.1% return on investment over 90 days.

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

Hexagon Composites ASA  vs.  Kitron ASA

Hexagon Composites ASA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hexagon Composites ASA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Hexagon Composites may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Kitron ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kitron ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Kitron ASA is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Hexagon Composites and Kitron ASA

The main advantage of trading using opposite Hexagon Composites and Kitron ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexagon Composites 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 Hexagon Composites 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.