Correlation Between Bergenbio ASA and Kongsberg Automotive
Can any of the company-specific risk be diversified away by investing in both Bergenbio ASA 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 Bergenbio ASA and Kongsberg Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bergenbio ASA and Kongsberg Automotive Holding, you can compare the effects of market volatilities on Bergenbio ASA 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 Bergenbio ASA with a short position of Kongsberg Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bergenbio ASA and Kongsberg Automotive.
Diversification Opportunities for Bergenbio ASA and Kongsberg Automotive
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bergenbio and Kongsberg is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bergenbio 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 Bergenbio 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 Bergenbio 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 Bergenbio ASA i.e., Bergenbio ASA and Kongsberg Automotive go up and down completely randomly.
Pair Corralation between Bergenbio ASA and Kongsberg Automotive
Assuming the 90 days trading horizon Bergenbio ASA is expected to generate 5.87 times more return on investment than Kongsberg Automotive. However, Bergenbio ASA is 5.87 times more volatile than Kongsberg Automotive Holding. It trades about 0.01 of its potential returns per unit of risk. Kongsberg Automotive Holding is currently generating about -0.03 per unit of risk. If you would invest 68,638 in Bergenbio ASA on August 24, 2024 and sell it today you would lose (67,640) from holding Bergenbio ASA or give up 98.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bergenbio ASA vs. Kongsberg Automotive Holding
Performance |
| Timeline |
| Bergenbio ASA |
| Kongsberg Automotive |
Bergenbio ASA and Kongsberg Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bergenbio ASA and Kongsberg Automotive
The main advantage of trading using opposite Bergenbio ASA and Kongsberg Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bergenbio ASA 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.| Bergenbio ASA vs. PCI Biotech Holding | Bergenbio ASA vs. Photocure | Bergenbio ASA vs. Idex ASA | Bergenbio ASA vs. XXL 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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