Correlation Between Innovative Solutions and Kongsberg Gruppen
Can any of the company-specific risk be diversified away by investing in both Innovative Solutions 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 Innovative Solutions and Kongsberg Gruppen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovative Solutions and and Kongsberg Gruppen ASA, you can compare the effects of market volatilities on Innovative Solutions 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 Innovative Solutions with a short position of Kongsberg Gruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Solutions and Kongsberg Gruppen.
Diversification Opportunities for Innovative Solutions and Kongsberg Gruppen
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Innovative and Kongsberg is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Solutions and 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 Innovative Solutions 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 Innovative Solutions and 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 Innovative Solutions i.e., Innovative Solutions and Kongsberg Gruppen go up and down completely randomly.
Pair Corralation between Innovative Solutions and Kongsberg Gruppen
Given the investment horizon of 90 days Innovative Solutions is expected to generate 19.16 times less return on investment than Kongsberg Gruppen. But when comparing it to its historical volatility, Innovative Solutions and is 1.32 times less risky than Kongsberg Gruppen. It trades about 0.01 of its potential returns per unit of risk. Kongsberg Gruppen ASA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,581 in Kongsberg Gruppen ASA on November 28, 2024 and sell it today you would earn a total of 8,344 from holding Kongsberg Gruppen ASA or generate 323.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 49.47% |
| Values | Daily Returns |
Innovative Solutions and vs. Kongsberg Gruppen ASA
Performance |
| Timeline |
| Innovative Solutions and |
| Kongsberg Gruppen ASA |
Innovative Solutions and Kongsberg Gruppen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Solutions and Kongsberg Gruppen
The main advantage of trading using opposite Innovative Solutions and Kongsberg Gruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Solutions 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.| Innovative Solutions vs. Park Electrochemical | Innovative Solutions vs. VSE Corporation | Innovative Solutions vs. Curtiss Wright | Innovative Solutions vs. Ducommun Incorporated |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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