Correlation Between Kongsberg Gruppen and Odfjell Technology
Can any of the company-specific risk be diversified away by investing in both Kongsberg Gruppen and Odfjell Technology 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 Odfjell Technology 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 Odfjell Technology, you can compare the effects of market volatilities on Kongsberg Gruppen and Odfjell Technology 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 Odfjell Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Gruppen and Odfjell Technology.
Diversification Opportunities for Kongsberg Gruppen and Odfjell Technology
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kongsberg and Odfjell is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and Odfjell Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell Technology 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 Odfjell Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell Technology has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and Odfjell Technology go up and down completely randomly.
Pair Corralation between Kongsberg Gruppen and Odfjell Technology
Assuming the 90 days trading horizon Kongsberg Gruppen ASA is expected to generate 0.75 times more return on investment than Odfjell Technology. However, Kongsberg Gruppen ASA is 1.33 times less risky than Odfjell Technology. It trades about 0.18 of its potential returns per unit of risk. Odfjell Technology is currently generating about 0.01 per unit of risk. If you would invest 42,871 in Kongsberg Gruppen ASA on September 12, 2024 and sell it today you would earn a total of 82,829 from holding Kongsberg Gruppen ASA or generate 193.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kongsberg Gruppen ASA vs. Odfjell Technology
Performance |
| Timeline |
| Kongsberg Gruppen ASA |
| Odfjell Technology |
Kongsberg Gruppen and Odfjell Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kongsberg Gruppen and Odfjell Technology
The main advantage of trading using opposite Kongsberg Gruppen and Odfjell Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Gruppen position performs unexpectedly, Odfjell Technology 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 Odfjell Technology will offset losses from the drop in Odfjell Technology'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 |
| Odfjell Technology vs. Odfjell Drilling | Odfjell Technology vs. NorAm Drilling AS | Odfjell Technology vs. SD Standard Drilling | Odfjell Technology 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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