Correlation Between Bank Rakyat and Kongsberg Gruppen
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Kongsberg Gruppen 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 Bank Rakyat and Kongsberg Gruppen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Kongsberg Gruppen ASA, you can compare the effects of market volatilities on Bank Rakyat and Kongsberg Gruppen 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 Bank Rakyat with a short position of Kongsberg Gruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Kongsberg Gruppen.
Diversification Opportunities for Bank Rakyat and Kongsberg Gruppen
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Kongsberg is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Kongsberg Gruppen ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kongsberg Gruppen ASA and Bank Rakyat 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 Bank Rakyat are associated (or correlated) with Kongsberg Gruppen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kongsberg Gruppen ASA has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Kongsberg Gruppen go up and down completely randomly.
Pair Corralation between Bank Rakyat and Kongsberg Gruppen
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Kongsberg Gruppen. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Rakyat is 1.93 times less risky than Kongsberg Gruppen. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Kongsberg Gruppen ASA is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 11,054 in Kongsberg Gruppen ASA on August 30, 2024 and sell it today you would lose (454.00) from holding Kongsberg Gruppen ASA or give up 4.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bank Rakyat vs. Kongsberg Gruppen ASA
Performance |
| Timeline |
| Bank Rakyat |
| Kongsberg Gruppen ASA |
Bank Rakyat and Kongsberg Gruppen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Kongsberg Gruppen
The main advantage of trading using opposite Bank Rakyat and Kongsberg Gruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Kongsberg Gruppen 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 Gruppen will offset losses from the drop in Kongsberg Gruppen's long position.| Bank Rakyat vs. Israel Discount Bank | Bank Rakyat vs. Danske Bank AS | Bank Rakyat vs. Absa Group Limited |
| Kongsberg Gruppen vs. Sturm Ruger | Kongsberg Gruppen vs. Ammo Inc | Kongsberg Gruppen vs. Kratos Defense Security | Kongsberg Gruppen vs. VSE Corporation |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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