Correlation Between Kitron ASA and Arcticzymes Technologies

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

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

Diversification Opportunities for Kitron ASA and Arcticzymes Technologies

0.64

Correlation Coefficient

Kitron ASA  Arcticzymes Technologies

Poor diversification

The 3 months correlation between Kitron and Arcticzymes is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Kitron ASA and Arcticzymes Technologies ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcticzymes Technologies 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 Arcticzymes Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcticzymes Technologies has no effect on the direction of Kitron ASA i.e., Kitron ASA and Arcticzymes Technologies go up and down completely randomly.

Pair Corralation between Kitron ASA and Arcticzymes Technologies

Assuming the 90 days trading horizon Kitron ASA is expected to generate 3.61 times less return on investment than Arcticzymes Technologies. But when comparing it to its historical volatility, Kitron ASA is 3.14 times less risky than Arcticzymes Technologies. It trades about 0.19 of its potential returns per unit of risk. Arcticzymes Technologies ASA is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,418  in Arcticzymes Technologies ASA on November 29, 2024 and sell it today you would earn a total of  404.00  from holding Arcticzymes Technologies ASA or generate 28.49% return on investment over 90 days.

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

Kitron ASA  vs.  Arcticzymes Technologies ASA

Kitron ASA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kitron ASA are ranked lower than 19 (%) 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.

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 13 (%) 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.

Pair Trading with Kitron ASA and Arcticzymes Technologies

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

The idea behind Kitron ASA and Arcticzymes Technologies 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.

Check out your portfolio center.

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.