Correlation Between Sparebank and Kitron ASA
Can any of the company-specific risk be diversified away by investing in both Sparebank 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 Sparebank and Kitron ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebank 1 SMN and Kitron ASA, you can compare the effects of market volatilities on Sparebank 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 Sparebank with a short position of Kitron ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Kitron ASA.
Diversification Opportunities for Sparebank and Kitron ASA
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sparebank and Kitron is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SMN and Kitron ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kitron ASA and Sparebank 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 Sparebank 1 SMN 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 Sparebank i.e., Sparebank and Kitron ASA go up and down completely randomly.
Pair Corralation between Sparebank and Kitron ASA
Assuming the 90 days trading horizon Sparebank is expected to generate 3.4 times less return on investment than Kitron ASA. But when comparing it to its historical volatility, Sparebank 1 SMN is 2.0 times less risky than Kitron ASA. It trades about 0.12 of its potential returns per unit of risk. Kitron ASA is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 5,094 in Kitron ASA on April 23, 2025 and sell it today you would earn a total of 1,436 from holding Kitron ASA or generate 28.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Sparebank 1 SMN vs. Kitron ASA
Performance |
| Timeline |
| Sparebank 1 SMN |
| Kitron ASA |
Sparebank and Kitron ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Kitron ASA
The main advantage of trading using opposite Sparebank and Kitron ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank 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.| Sparebank vs. Sparebank 1 Ostfold | Sparebank vs. Sparebank 1 Nord Norge | Sparebank vs. Sparebanken Mre | Sparebank vs. Storebrand ASA |
| Kitron ASA vs. Europris ASA | Kitron ASA vs. Kongsberg Gruppen ASA | Kitron ASA vs. Nordic Semiconductor ASA | Kitron ASA vs. Storebrand ASA |
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.
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