Correlation Between Kitron ASA and Next Biometrics

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

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

Diversification Opportunities for Kitron ASA and Next Biometrics

-0.51

Correlation Coefficient

Kitron ASA  Next Biometrics

Excellent diversification

The 3 months correlation between Kitron and Next is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kitron ASA and Next Biometrics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Biometrics Group and Kitron 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 Kitron ASA are associated (or correlated) with Next Biometrics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Biometrics Group has no effect on the direction of Kitron ASA i.e., Kitron ASA and Next Biometrics go up and down completely randomly.

Pair Corralation between Kitron ASA and Next Biometrics

Assuming the 90 days trading horizon Kitron ASA is expected to generate 0.69 times more return on investment than Next Biometrics. However, Kitron ASA is 1.45 times less risky than Next Biometrics. It trades about 0.2 of its potential returns per unit of risk. Next Biometrics Group is currently generating about -0.01 per unit of risk. 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 Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kitron ASA  vs.  Next Biometrics Group

Kitron ASA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kitron ASA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Kitron ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Next Biometrics Group

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Kitron ASA and Next Biometrics

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

The idea behind Kitron ASA and Next Biometrics Group 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.