Correlation Between Kongsberg Gruppen and Bouvet
Can any of the company-specific risk be diversified away by investing in both Kongsberg Gruppen and Bouvet 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 Bouvet 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 Bouvet, you can compare the effects of market volatilities on Kongsberg Gruppen and Bouvet 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 Bouvet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Gruppen and Bouvet.
Diversification Opportunities for Kongsberg Gruppen and Bouvet
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kongsberg and Bouvet is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and Bouvet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouvet 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 Bouvet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bouvet has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and Bouvet go up and down completely randomly.
Pair Corralation between Kongsberg Gruppen and Bouvet
Assuming the 90 days trading horizon Kongsberg Gruppen ASA is expected to generate 1.44 times more return on investment than Bouvet. However, Kongsberg Gruppen is 1.44 times more volatile than Bouvet. It trades about 0.17 of its potential returns per unit of risk. Bouvet is currently generating about 0.13 per unit of risk. If you would invest 118,500 in Kongsberg Gruppen ASA on September 13, 2024 and sell it today you would earn a total of 8,600 from holding Kongsberg Gruppen ASA or generate 7.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kongsberg Gruppen ASA vs. Bouvet
Performance |
| Timeline |
| Kongsberg Gruppen ASA |
| Bouvet |
Kongsberg Gruppen and Bouvet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kongsberg Gruppen and Bouvet
The main advantage of trading using opposite Kongsberg Gruppen and Bouvet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Gruppen position performs unexpectedly, Bouvet 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 Bouvet will offset losses from the drop in Bouvet's long position.| Kongsberg Gruppen vs. Eidesvik Offshore ASA | Kongsberg Gruppen vs. Kitron ASA | Kongsberg Gruppen vs. Havila Shipping ASA | Kongsberg Gruppen vs. Arendals Fossekompani ASA |
| Bouvet vs. Huddlestock Fintech As | Bouvet vs. Xplora Technologies As | Bouvet vs. Polight ASA | Bouvet 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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