Correlation Between Kongsberg Gruppen and AF Gruppen
Can any of the company-specific risk be diversified away by investing in both Kongsberg Gruppen and AF Gruppen 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 AF Gruppen 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 AF Gruppen ASA, you can compare the effects of market volatilities on Kongsberg Gruppen and AF Gruppen 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 AF Gruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Gruppen and AF Gruppen.
Diversification Opportunities for Kongsberg Gruppen and AF Gruppen
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kongsberg and AFG is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and AF Gruppen ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AF Gruppen 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 AF Gruppen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AF Gruppen ASA has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and AF Gruppen go up and down completely randomly.
Pair Corralation between Kongsberg Gruppen and AF Gruppen
Assuming the 90 days trading horizon Kongsberg Gruppen ASA is expected to generate 1.7 times more return on investment than AF Gruppen. However, Kongsberg Gruppen is 1.7 times more volatile than AF Gruppen ASA. It trades about 0.28 of its potential returns per unit of risk. AF Gruppen ASA is currently generating about 0.18 per unit of risk. If you would invest 102,542 in Kongsberg Gruppen ASA on August 29, 2024 and sell it today you would earn a total of 26,058 from holding Kongsberg Gruppen ASA or generate 25.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kongsberg Gruppen ASA vs. AF Gruppen ASA
Performance |
| Timeline |
| Kongsberg Gruppen ASA |
| AF Gruppen ASA |
Kongsberg Gruppen and AF Gruppen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kongsberg Gruppen and AF Gruppen
The main advantage of trading using opposite Kongsberg Gruppen and AF Gruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Gruppen position performs unexpectedly, AF Gruppen 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 AF Gruppen will offset losses from the drop in AF Gruppen's long position.| Kongsberg Gruppen vs. DnB ASA | Kongsberg Gruppen vs. Orkla ASA | Kongsberg Gruppen vs. Storebrand ASA | Kongsberg Gruppen vs. Yara International ASA |
| AF Gruppen vs. Veidekke ASA | AF Gruppen vs. Gjensidige Forsikring ASA | AF Gruppen vs. Orkla ASA | AF Gruppen vs. Kongsberg Gruppen 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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