Correlation Between Kongsberg Automotive and Magna International
Can any of the company-specific risk be diversified away by investing in both Kongsberg Automotive and Magna International 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 Kongsberg Automotive and Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kongsberg Automotive ASA and Magna International, you can compare the effects of market volatilities on Kongsberg Automotive and Magna International 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 Kongsberg Automotive with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Automotive and Magna International.
Diversification Opportunities for Kongsberg Automotive and Magna International
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kongsberg and Magna is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Automotive ASA and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and Kongsberg Automotive 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 Kongsberg Automotive ASA are associated (or correlated) with Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of Kongsberg Automotive i.e., Kongsberg Automotive and Magna International go up and down completely randomly.
Pair Corralation between Kongsberg Automotive and Magna International
If you would invest 11.00 in Kongsberg Automotive ASA on October 9, 2024 and sell it today you would earn a total of 0.00 from holding Kongsberg Automotive ASA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kongsberg Automotive ASA vs. Magna International
Performance |
| Timeline |
| Kongsberg Automotive ASA |
| Magna International |
Kongsberg Automotive and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kongsberg Automotive and Magna International
The main advantage of trading using opposite Kongsberg Automotive and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Automotive position performs unexpectedly, Magna International 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 Magna International will offset losses from the drop in Magna International's long position.The idea behind Kongsberg Automotive ASA and Magna International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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