Correlation Between Kitron ASA and American Shipping

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

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

Diversification Opportunities for Kitron ASA and American Shipping

0.34

Correlation Coefficient

Kitron ASA  American Shipping

Weak diversification

The 3 months correlation between Kitron and American is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kitron ASA and American Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Shipping 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 American Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Shipping has no effect on the direction of Kitron ASA i.e., Kitron ASA and American Shipping go up and down completely randomly.

Pair Corralation between Kitron ASA and American Shipping

Assuming the 90 days trading horizon Kitron ASA is expected to generate 1.02 times more return on investment than American Shipping. However, Kitron ASA is 1.02 times more volatile than American Shipping. It trades about 0.17 of its potential returns per unit of risk. American Shipping is currently generating about 0.13 per unit of risk. If you would invest  3,448  in Kitron ASA on December 31, 2024 and sell it today you would earn a total of  976.00  from holding Kitron ASA or generate 28.31% return on investment over 90 days.

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

Kitron ASA  vs.  American Shipping

Kitron ASA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kitron ASA are ranked lower than 13 (%) 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.

American Shipping

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Shipping are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, American Shipping disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kitron ASA and American Shipping

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

The idea behind Kitron ASA and American Shipping 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..