Correlation Between Schibsted ASA and Kid ASA

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

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

Diversification Opportunities for Schibsted ASA and Kid ASA

-0.72

Correlation Coefficient

Schibsted ASA  Kid ASA

Pay attention - limited upside

The 3 months correlation between Schibsted and Kid is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Schibsted ASA B and Kid ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kid ASA and Schibsted 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 Schibsted ASA B are associated (or correlated) with Kid ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kid ASA has no effect on the direction of Schibsted ASA i.e., Schibsted ASA and Kid ASA go up and down completely randomly.

Pair Corralation between Schibsted ASA and Kid ASA

Assuming the 90 days trading horizon Schibsted ASA B is expected to generate 0.91 times more return on investment than Kid ASA. However, Schibsted ASA B is 1.1 times less risky than Kid ASA. It trades about 0.1 of its potential returns per unit of risk. Kid ASA is currently generating about -0.09 per unit of risk. If you would invest  31,400  in Schibsted ASA B on September 9, 2024 and sell it today you would earn a total of  3,720  from holding Schibsted ASA B or generate 11.85% return on investment over 90 days.

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

Schibsted ASA B  vs.  Kid ASA

Schibsted ASA B

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Schibsted ASA B are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Schibsted ASA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kid ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kid ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Schibsted ASA and Kid ASA

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

The idea behind Schibsted ASA B and Kid 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.