Correlation Between Kmc Properties and Entra ASA

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

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

Diversification Opportunities for Kmc Properties and Entra ASA

0.63

Correlation Coefficient

Kmc Properties  Entra ASA

Poor diversification

The 3 months correlation between Kmc and Entra is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kmc Properties ASA and Entra ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entra ASA and Kmc Properties 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 Kmc Properties ASA are associated (or correlated) with Entra ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entra ASA has no effect on the direction of Kmc Properties i.e., Kmc Properties and Entra ASA go up and down completely randomly.

Pair Corralation between Kmc Properties and Entra ASA

Assuming the 90 days trading horizon Kmc Properties ASA is expected to under-perform the Entra ASA. In addition to that, Kmc Properties is 8.05 times more volatile than Entra ASA. It trades about -0.14 of its total potential returns per unit of risk. Entra ASA is currently generating about -0.04 per unit of volatility. If you would invest  12,700  in Entra ASA on September 4, 2024 and sell it today you would lose (680.00) from holding Entra ASA or give up 5.35% of portfolio value over 90 days.

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

Kmc Properties ASA  vs.  Entra ASA

Kmc Properties ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kmc Properties ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Entra ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entra ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Entra ASA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Kmc Properties and Entra ASA

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

The idea behind Kmc Properties ASA and Entra 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .