Correlation Between Kongsberg Gruppen and Aker Carbon
Can any of the company-specific risk be diversified away by investing in both Kongsberg Gruppen and Aker Carbon 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 Aker Carbon 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 Aker Carbon Capture, you can compare the effects of market volatilities on Kongsberg Gruppen and Aker Carbon 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 Aker Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Gruppen and Aker Carbon.
Diversification Opportunities for Kongsberg Gruppen and Aker Carbon
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kongsberg and Aker is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and Aker Carbon Capture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Carbon Capture 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 Aker Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Carbon Capture has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and Aker Carbon go up and down completely randomly.
Pair Corralation between Kongsberg Gruppen and Aker Carbon
Assuming the 90 days trading horizon Kongsberg Gruppen ASA is expected to generate 1.05 times more return on investment than Aker Carbon. However, Kongsberg Gruppen is 1.05 times more volatile than Aker Carbon Capture. It trades about 0.28 of its potential returns per unit of risk. Aker Carbon Capture is currently generating about -0.1 per unit of risk. If you would invest 102,343 in Kongsberg Gruppen ASA on August 28, 2024 and sell it today you would earn a total of 26,257 from holding Kongsberg Gruppen ASA or generate 25.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kongsberg Gruppen ASA vs. Aker Carbon Capture
Performance |
| Timeline |
| Kongsberg Gruppen ASA |
| Aker Carbon Capture |
Kongsberg Gruppen and Aker Carbon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kongsberg Gruppen and Aker Carbon
The main advantage of trading using opposite Kongsberg Gruppen and Aker Carbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Gruppen position performs unexpectedly, Aker Carbon 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 Aker Carbon will offset losses from the drop in Aker Carbon's long position.| Kongsberg Gruppen vs. DnB ASA | Kongsberg Gruppen vs. Orkla ASA | Kongsberg Gruppen vs. Storebrand ASA | Kongsberg Gruppen vs. Yara International 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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