Correlation Between Kongsberg Gruppen and ABL Group
Can any of the company-specific risk be diversified away by investing in both Kongsberg Gruppen and ABL Group 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 Gruppen and ABL Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kongsberg Gruppen ASA and ABL Group ASA, you can compare the effects of market volatilities on Kongsberg Gruppen and ABL Group 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 Gruppen with a short position of ABL Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Gruppen and ABL Group.
Diversification Opportunities for Kongsberg Gruppen and ABL Group
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kongsberg and ABL is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and ABL Group ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABL Group ASA and Kongsberg Gruppen 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 Gruppen ASA are associated (or correlated) with ABL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABL Group ASA has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and ABL Group go up and down completely randomly.
Pair Corralation between Kongsberg Gruppen and ABL Group
Assuming the 90 days trading horizon Kongsberg Gruppen ASA is expected to generate 2.32 times more return on investment than ABL Group. However, Kongsberg Gruppen is 2.32 times more volatile than ABL Group ASA. It trades about 0.19 of its potential returns per unit of risk. ABL Group ASA is currently generating about 0.05 per unit of risk. If you would invest 127,300 in Kongsberg Gruppen ASA on November 1, 2024 and sell it today you would earn a total of 8,800 from holding Kongsberg Gruppen ASA or generate 6.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Kongsberg Gruppen ASA vs. ABL Group ASA
Performance |
| Timeline |
| Kongsberg Gruppen ASA |
| ABL Group ASA |
Kongsberg Gruppen and ABL Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kongsberg Gruppen and ABL Group
The main advantage of trading using opposite Kongsberg Gruppen and ABL Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Gruppen position performs unexpectedly, ABL Group 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 ABL Group will offset losses from the drop in ABL Group's long position.| Kongsberg Gruppen vs. DnB ASA | Kongsberg Gruppen vs. Orkla ASA | Kongsberg Gruppen vs. Storebrand ASA | Kongsberg Gruppen vs. Yara International ASA |
| ABL Group vs. Akastor ASA | ABL Group vs. Reach Subsea | ABL Group vs. Eidesvik Offshore ASA | ABL Group vs. SD Standard Drilling |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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