Correlation Between Kitron ASA and Aker Carbon

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

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

Diversification Opportunities for Kitron ASA and Aker Carbon

-0.26

Correlation Coefficient

Kitron ASA  Aker Carbon

Very good diversification

The 3 months correlation between Kitron and Aker is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Kitron ASA and Aker Carbon Capture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Carbon Capture and Kitron 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 Kitron ASA are associated (or correlated) with Aker Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Carbon Capture has no effect on the direction of Kitron ASA i.e., Kitron ASA and Aker Carbon go up and down completely randomly.

Pair Corralation between Kitron ASA and Aker Carbon

Assuming the 90 days trading horizon Kitron ASA is expected to under-perform the Aker Carbon. But the stock apears to be less risky and, when comparing its historical volatility, Kitron ASA is 1.28 times less risky than Aker Carbon. The stock trades about -0.06 of its potential returns per unit of risk. The Aker Carbon Capture is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  617.00  in Aker Carbon Capture on September 2, 2024 and sell it today you would lose (20.00) from holding Aker Carbon Capture or give up 3.24% of portfolio value over 90 days.

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

Kitron ASA  vs.  Aker Carbon Capture

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 latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Aker Carbon Capture

Risk-Adjusted Performance

0 of 100

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 quite persistent fundamental indicators, Aker Carbon 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 Kitron ASA and Aker Carbon

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

The idea behind Kitron ASA and Aker Carbon Capture 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 Anywhere module to track or share privately all of your investments from the convenience of any device.