Correlation Between Kongsberg Gruppen and EAM Solar
Can any of the company-specific risk be diversified away by investing in both Kongsberg Gruppen and EAM Solar 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 EAM Solar 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 EAM Solar ASA, you can compare the effects of market volatilities on Kongsberg Gruppen and EAM Solar 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 EAM Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Gruppen and EAM Solar.
Diversification Opportunities for Kongsberg Gruppen and EAM Solar
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kongsberg and EAM is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and EAM Solar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAM Solar 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 EAM Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAM Solar ASA has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and EAM Solar go up and down completely randomly.
Pair Corralation between Kongsberg Gruppen and EAM Solar
Assuming the 90 days trading horizon Kongsberg Gruppen is expected to generate 5.98 times less return on investment than EAM Solar. But when comparing it to its historical volatility, Kongsberg Gruppen ASA is 23.4 times less risky than EAM Solar. It trades about 0.21 of its potential returns per unit of risk. EAM Solar ASA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,685 in EAM Solar ASA on September 15, 2024 and sell it today you would lose (1,670) from holding EAM Solar ASA or give up 99.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Kongsberg Gruppen ASA vs. EAM Solar ASA
Performance |
| Timeline |
| Kongsberg Gruppen ASA |
| EAM Solar ASA |
Kongsberg Gruppen and EAM Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kongsberg Gruppen and EAM Solar
The main advantage of trading using opposite Kongsberg Gruppen and EAM Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Gruppen position performs unexpectedly, EAM Solar 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 EAM Solar will offset losses from the drop in EAM Solar's long position.| Kongsberg Gruppen vs. DnB ASA | Kongsberg Gruppen vs. Orkla ASA | Kongsberg Gruppen vs. Storebrand ASA | Kongsberg Gruppen vs. Yara International ASA |
| EAM Solar vs. AF Gruppen ASA | EAM Solar vs. Aker ASA | EAM Solar vs. Kitron ASA | EAM Solar 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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