Correlation Between Aker BP and Kongsberg Automotive
Can any of the company-specific risk be diversified away by investing in both Aker BP and Kongsberg Automotive 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 Aker BP and Kongsberg Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aker BP ASA and Kongsberg Automotive Holding, you can compare the effects of market volatilities on Aker BP and Kongsberg Automotive 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 Aker BP with a short position of Kongsberg Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker BP and Kongsberg Automotive.
Diversification Opportunities for Aker BP and Kongsberg Automotive
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aker and Kongsberg is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aker BP ASA and Kongsberg Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kongsberg Automotive and Aker BP 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 Aker BP ASA are associated (or correlated) with Kongsberg Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kongsberg Automotive has no effect on the direction of Aker BP i.e., Aker BP and Kongsberg Automotive go up and down completely randomly.
Pair Corralation between Aker BP and Kongsberg Automotive
Assuming the 90 days trading horizon Aker BP is expected to generate 8.65 times less return on investment than Kongsberg Automotive. But when comparing it to its historical volatility, Aker BP ASA is 1.4 times less risky than Kongsberg Automotive. It trades about 0.02 of its potential returns per unit of risk. Kongsberg Automotive Holding is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 138.00 in Kongsberg Automotive Holding on September 5, 2024 and sell it today you would earn a total of 9.00 from holding Kongsberg Automotive Holding or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aker BP ASA vs. Kongsberg Automotive Holding
Performance |
| Timeline |
| Aker BP ASA |
| Kongsberg Automotive |
Aker BP and Kongsberg Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker BP and Kongsberg Automotive
The main advantage of trading using opposite Aker BP and Kongsberg Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker BP position performs unexpectedly, Kongsberg Automotive 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 Kongsberg Automotive will offset losses from the drop in Kongsberg Automotive's long position.| Aker BP vs. Kongsberg Automotive Holding | Aker BP vs. Questerre Energy | Aker BP vs. Okea ASA | Aker BP vs. Hunter Group ASA |
| Kongsberg Automotive vs. Zaptec AS | Kongsberg Automotive vs. Norwegian Air Shuttle | Kongsberg Automotive vs. Elkem ASA | Kongsberg Automotive vs. Integrated Wind Solutions |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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