Correlation Between Strongpoint ASA and Kitron ASA

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

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

Diversification Opportunities for Strongpoint ASA and Kitron ASA

-0.33

Correlation Coefficient

Strongpoint ASA  Kitron ASA

Very good diversification

The 3 months correlation between Strongpoint and Kitron is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Strongpoint ASA and Kitron ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kitron ASA and Strongpoint 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 Strongpoint ASA are associated (or correlated) with Kitron ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kitron ASA has no effect on the direction of Strongpoint ASA i.e., Strongpoint ASA and Kitron ASA go up and down completely randomly.

Pair Corralation between Strongpoint ASA and Kitron ASA

Assuming the 90 days trading horizon Strongpoint ASA is expected to generate 1.12 times more return on investment than Kitron ASA. However, Strongpoint ASA is 1.12 times more volatile than Kitron ASA. It trades about 0.05 of its potential returns per unit of risk. Kitron ASA is currently generating about -0.03 per unit of risk. If you would invest  966.00  in Strongpoint ASA on September 4, 2024 and sell it today you would earn a total of  54.00  from holding Strongpoint ASA or generate 5.59% return on investment over 90 days.

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

Strongpoint ASA  vs.  Kitron ASA

Strongpoint ASA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Strongpoint ASA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Strongpoint ASA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kitron ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kitron ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Kitron ASA is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Strongpoint ASA and Kitron ASA

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

The idea behind Strongpoint ASA and Kitron 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.