Correlation Between Gjensidige Forsikring and Kongsberg Gruppen
Can any of the company-specific risk be diversified away by investing in both Gjensidige Forsikring 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 Gjensidige Forsikring and Kongsberg Gruppen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gjensidige Forsikring ASA and Kongsberg Gruppen ASA, you can compare the effects of market volatilities on Gjensidige Forsikring 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 Gjensidige Forsikring with a short position of Kongsberg Gruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gjensidige Forsikring and Kongsberg Gruppen.
Diversification Opportunities for Gjensidige Forsikring and Kongsberg Gruppen
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gjensidige and Kongsberg is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Gjensidige Forsikring ASA 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 Gjensidige Forsikring 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 Gjensidige Forsikring ASA 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 Gjensidige Forsikring i.e., Gjensidige Forsikring and Kongsberg Gruppen go up and down completely randomly.
Pair Corralation between Gjensidige Forsikring and Kongsberg Gruppen
Assuming the 90 days trading horizon Gjensidige Forsikring ASA is expected to under-perform the Kongsberg Gruppen. But the stock apears to be less risky and, when comparing its historical volatility, Gjensidige Forsikring ASA is 1.64 times less risky than Kongsberg Gruppen. The stock trades about -0.11 of its potential returns per unit of risk. The Kongsberg Gruppen ASA is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 116,600 in Kongsberg Gruppen ASA on August 29, 2024 and sell it today you would earn a total of 12,000 from holding Kongsberg Gruppen ASA or generate 10.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gjensidige Forsikring ASA vs. Kongsberg Gruppen ASA
Performance |
| Timeline |
| Gjensidige Forsikring ASA |
| Kongsberg Gruppen ASA |
Gjensidige Forsikring and Kongsberg Gruppen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gjensidige Forsikring and Kongsberg Gruppen
The main advantage of trading using opposite Gjensidige Forsikring and Kongsberg Gruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gjensidige Forsikring 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.| Gjensidige Forsikring vs. DnB ASA | Gjensidige Forsikring vs. Storebrand ASA | Gjensidige Forsikring vs. Orkla ASA | Gjensidige Forsikring vs. Telenor ASA |
| Kongsberg Gruppen vs. DnB ASA | Kongsberg Gruppen vs. Orkla ASA | Kongsberg Gruppen vs. Storebrand ASA | Kongsberg Gruppen vs. Yara International 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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