Correlation Between Kongsberg Automotive and REC Silicon
Can any of the company-specific risk be diversified away by investing in both Kongsberg Automotive and REC Silicon 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 REC Silicon 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 REC Silicon ASA, you can compare the effects of market volatilities on Kongsberg Automotive and REC Silicon 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 REC Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Automotive and REC Silicon.
Diversification Opportunities for Kongsberg Automotive and REC Silicon
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kongsberg and REC is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Automotive Holding and REC Silicon ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REC Silicon ASA 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 REC Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REC Silicon ASA has no effect on the direction of Kongsberg Automotive i.e., Kongsberg Automotive and REC Silicon go up and down completely randomly.
Pair Corralation between Kongsberg Automotive and REC Silicon
Assuming the 90 days trading horizon Kongsberg Automotive Holding is expected to generate 0.47 times more return on investment than REC Silicon. However, Kongsberg Automotive Holding is 2.15 times less risky than REC Silicon. It trades about -0.02 of its potential returns per unit of risk. REC Silicon ASA is currently generating about -0.06 per unit of risk. If you would invest 276.00 in Kongsberg Automotive Holding on October 24, 2024 and sell it today you would lose (109.00) from holding Kongsberg Automotive Holding or give up 39.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kongsberg Automotive Holding vs. REC Silicon ASA
Performance |
| Timeline |
| Kongsberg Automotive |
| REC Silicon ASA |
Kongsberg Automotive and REC Silicon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kongsberg Automotive and REC Silicon
The main advantage of trading using opposite Kongsberg Automotive and REC Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Automotive position performs unexpectedly, REC Silicon 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 REC Silicon will offset losses from the drop in REC Silicon's long position.The idea behind Kongsberg Automotive Holding and REC Silicon ASA 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.| REC Silicon vs. Aker Horizons AS | REC Silicon vs. MPC Container Ships | REC Silicon vs. Aker Carbon Capture | REC Silicon vs. Nordic Semiconductor 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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