Correlation Between Kongsberg Automotive and American Shipping
Can any of the company-specific risk be diversified away by investing in both Kongsberg Automotive and American Shipping 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 American Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kongsberg Automotive Holding and American Shipping, you can compare the effects of market volatilities on Kongsberg Automotive and American Shipping 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 American Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Automotive and American Shipping.
Diversification Opportunities for Kongsberg Automotive and American Shipping
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kongsberg and American is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Automotive Holding and American Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Shipping 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 Holding are associated (or correlated) with American Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Shipping has no effect on the direction of Kongsberg Automotive i.e., Kongsberg Automotive and American Shipping go up and down completely randomly.
Pair Corralation between Kongsberg Automotive and American Shipping
Assuming the 90 days trading horizon Kongsberg Automotive Holding is expected to under-perform the American Shipping. But the stock apears to be less risky and, when comparing its historical volatility, Kongsberg Automotive Holding is 1.23 times less risky than American Shipping. The stock trades about -0.03 of its potential returns per unit of risk. The American Shipping is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3,524 in American Shipping on September 3, 2024 and sell it today you would lose (759.00) from holding American Shipping or give up 21.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kongsberg Automotive Holding vs. American Shipping
Performance |
| Timeline |
| Kongsberg Automotive |
| American Shipping |
Kongsberg Automotive and American Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kongsberg Automotive and American Shipping
The main advantage of trading using opposite Kongsberg Automotive and American Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Automotive position performs unexpectedly, American Shipping 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 American Shipping will offset losses from the drop in American Shipping's long position.The idea behind Kongsberg Automotive Holding and American Shipping 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.| American Shipping vs. Stolt Nielsen Limited | American Shipping vs. BW LPG | American Shipping vs. Aker ASA | American Shipping vs. BW Offshore |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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