Correlation Between Kongsberg Gruppen and Aker Solutions
Can any of the company-specific risk be diversified away by investing in both Kongsberg Gruppen and Aker Solutions 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 Solutions 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 Solutions ASA, you can compare the effects of market volatilities on Kongsberg Gruppen and Aker Solutions 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 Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Gruppen and Aker Solutions.
Diversification Opportunities for Kongsberg Gruppen and Aker Solutions
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kongsberg and Aker is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and Aker Solutions ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Solutions 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 Aker Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Solutions ASA has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and Aker Solutions go up and down completely randomly.
Pair Corralation between Kongsberg Gruppen and Aker Solutions
Assuming the 90 days trading horizon Kongsberg Gruppen ASA is expected to under-perform the Aker Solutions. But the stock apears to be less risky and, when comparing its historical volatility, Kongsberg Gruppen ASA is 1.31 times less risky than Aker Solutions. The stock trades about -0.09 of its potential returns per unit of risk. The Aker Solutions ASA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,044 in Aker Solutions ASA on October 20, 2024 and sell it today you would earn a total of 116.00 from holding Aker Solutions ASA or generate 3.81% 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. Aker Solutions ASA
Performance |
| Timeline |
| Kongsberg Gruppen ASA |
| Aker Solutions ASA |
Kongsberg Gruppen and Aker Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kongsberg Gruppen and Aker Solutions
The main advantage of trading using opposite Kongsberg Gruppen and Aker Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Gruppen position performs unexpectedly, Aker Solutions 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 Solutions will offset losses from the drop in Aker Solutions' long position.| Kongsberg Gruppen vs. DnB ASA | Kongsberg Gruppen vs. Orkla ASA | Kongsberg Gruppen vs. Storebrand ASA | Kongsberg Gruppen vs. Yara International ASA |
| Aker Solutions vs. Subsea 7 SA | Aker Solutions vs. Aker ASA | Aker Solutions vs. Dno ASA | Aker Solutions vs. Aker Carbon Capture |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |