Correlation Between Kongsberg Gruppen and Gjensidige Forsikring
Can any of the company-specific risk be diversified away by investing in both Kongsberg Gruppen and Gjensidige Forsikring 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 Gjensidige Forsikring 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 Gjensidige Forsikring ASA, you can compare the effects of market volatilities on Kongsberg Gruppen and Gjensidige Forsikring 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 Gjensidige Forsikring. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Gruppen and Gjensidige Forsikring.
Diversification Opportunities for Kongsberg Gruppen and Gjensidige Forsikring
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kongsberg and Gjensidige is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and Gjensidige Forsikring ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gjensidige Forsikring 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 Gjensidige Forsikring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gjensidige Forsikring ASA has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and Gjensidige Forsikring go up and down completely randomly.
Pair Corralation between Kongsberg Gruppen and Gjensidige Forsikring
Assuming the 90 days trading horizon Kongsberg Gruppen ASA is expected to generate 1.88 times more return on investment than Gjensidige Forsikring. However, Kongsberg Gruppen is 1.88 times more volatile than Gjensidige Forsikring ASA. It trades about 0.14 of its potential returns per unit of risk. Gjensidige Forsikring ASA is currently generating about 0.05 per unit of risk. If you would invest 89,575 in Kongsberg Gruppen ASA on August 29, 2024 and sell it today you would earn a total of 39,025 from holding Kongsberg Gruppen ASA or generate 43.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kongsberg Gruppen ASA vs. Gjensidige Forsikring ASA
Performance |
| Timeline |
| Kongsberg Gruppen ASA |
| Gjensidige Forsikring ASA |
Kongsberg Gruppen and Gjensidige Forsikring Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kongsberg Gruppen and Gjensidige Forsikring
The main advantage of trading using opposite Kongsberg Gruppen and Gjensidige Forsikring positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Gruppen position performs unexpectedly, Gjensidige Forsikring 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 Gjensidige Forsikring will offset losses from the drop in Gjensidige Forsikring's long position.| Kongsberg Gruppen vs. DnB ASA | Kongsberg Gruppen vs. Orkla ASA | Kongsberg Gruppen vs. Storebrand ASA | Kongsberg Gruppen vs. Yara International ASA |
| Gjensidige Forsikring vs. DnB ASA | Gjensidige Forsikring vs. Storebrand ASA | Gjensidige Forsikring vs. Orkla ASA | Gjensidige Forsikring vs. Telenor 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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