Correlation Between Kongsberg Gruppen and Pareto Bank
Can any of the company-specific risk be diversified away by investing in both Kongsberg Gruppen and Pareto Bank 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 Pareto Bank 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 Pareto Bank ASA, you can compare the effects of market volatilities on Kongsberg Gruppen and Pareto Bank 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 Pareto Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Gruppen and Pareto Bank.
Diversification Opportunities for Kongsberg Gruppen and Pareto Bank
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kongsberg and Pareto is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and Pareto Bank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pareto Bank 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 Pareto Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pareto Bank ASA has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and Pareto Bank go up and down completely randomly.
Pair Corralation between Kongsberg Gruppen and Pareto Bank
Assuming the 90 days trading horizon Kongsberg Gruppen ASA is expected to under-perform the Pareto Bank. In addition to that, Kongsberg Gruppen is 1.64 times more volatile than Pareto Bank ASA. It trades about -0.09 of its total potential returns per unit of risk. Pareto Bank ASA is currently generating about 0.37 per unit of volatility. If you would invest 6,510 in Pareto Bank ASA on October 20, 2024 and sell it today you would earn a total of 490.00 from holding Pareto Bank ASA or generate 7.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Kongsberg Gruppen ASA vs. Pareto Bank ASA
Performance |
| Timeline |
| Kongsberg Gruppen ASA |
| Pareto Bank ASA |
Kongsberg Gruppen and Pareto Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kongsberg Gruppen and Pareto Bank
The main advantage of trading using opposite Kongsberg Gruppen and Pareto Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Gruppen position performs unexpectedly, Pareto Bank 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 Pareto Bank will offset losses from the drop in Pareto Bank's long position.| Kongsberg Gruppen vs. DnB ASA | Kongsberg Gruppen vs. Orkla ASA | Kongsberg Gruppen vs. Storebrand ASA | Kongsberg Gruppen vs. Yara International ASA |
| Pareto Bank vs. Sparebank 1 SMN | Pareto Bank vs. Storebrand ASA | Pareto Bank vs. DnB ASA | Pareto Bank vs. Europris 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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