Correlation Between Kraft Bank and Itera ASA

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

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

Diversification Opportunities for Kraft Bank and Itera ASA

0.46

Correlation Coefficient

Kraft Bank  Itera ASA

Very weak diversification

The 3 months correlation between Kraft and Itera is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Bank Asa and Itera ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itera ASA and Kraft Bank 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 Kraft Bank Asa are associated (or correlated) with Itera ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itera ASA has no effect on the direction of Kraft Bank i.e., Kraft Bank and Itera ASA go up and down completely randomly.

Pair Corralation between Kraft Bank and Itera ASA

Assuming the 90 days trading horizon Kraft Bank Asa is expected to generate 0.66 times more return on investment than Itera ASA. However, Kraft Bank Asa is 1.52 times less risky than Itera ASA. It trades about 0.04 of its potential returns per unit of risk. Itera ASA is currently generating about -0.08 per unit of risk. If you would invest  850.00  in Kraft Bank Asa on September 2, 2024 and sell it today you would earn a total of  35.00  from holding Kraft Bank Asa or generate 4.12% return on investment over 90 days.

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

Kraft Bank Asa  vs.  Itera ASA

Kraft Bank Asa

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kraft Bank Asa are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Kraft Bank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Itera ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Itera ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Kraft Bank and Itera ASA

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

The idea behind Kraft Bank Asa and Itera 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.