Correlation Between Kongsberg Gruppen and Pyrum Innovations
Can any of the company-specific risk be diversified away by investing in both Kongsberg Gruppen and Pyrum Innovations 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 Pyrum Innovations 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 Pyrum Innovations AG, you can compare the effects of market volatilities on Kongsberg Gruppen and Pyrum Innovations 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 Pyrum Innovations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Gruppen and Pyrum Innovations.
Diversification Opportunities for Kongsberg Gruppen and Pyrum Innovations
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kongsberg and Pyrum is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and Pyrum Innovations AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyrum Innovations 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 Pyrum Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyrum Innovations has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and Pyrum Innovations go up and down completely randomly.
Pair Corralation between Kongsberg Gruppen and Pyrum Innovations
Assuming the 90 days trading horizon Kongsberg Gruppen ASA is expected to generate 0.83 times more return on investment than Pyrum Innovations. However, Kongsberg Gruppen ASA is 1.2 times less risky than Pyrum Innovations. It trades about 0.29 of its potential returns per unit of risk. Pyrum Innovations AG is currently generating about -0.03 per unit of risk. If you would invest 114,500 in Kongsberg Gruppen ASA on September 1, 2024 and sell it today you would earn a total of 15,400 from holding Kongsberg Gruppen ASA or generate 13.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Kongsberg Gruppen ASA vs. Pyrum Innovations AG
Performance |
| Timeline |
| Kongsberg Gruppen ASA |
| Pyrum Innovations |
Kongsberg Gruppen and Pyrum Innovations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kongsberg Gruppen and Pyrum Innovations
The main advantage of trading using opposite Kongsberg Gruppen and Pyrum Innovations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Gruppen position performs unexpectedly, Pyrum Innovations 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 Pyrum Innovations will offset losses from the drop in Pyrum Innovations' long position.| Kongsberg Gruppen vs. DnB ASA | Kongsberg Gruppen vs. Orkla ASA | Kongsberg Gruppen vs. Storebrand ASA | Kongsberg Gruppen vs. Yara International ASA |
| Pyrum Innovations vs. Aker Horizons AS | Pyrum Innovations vs. Aker Solutions ASA | Pyrum Innovations vs. REC Silicon ASA | Pyrum Innovations vs. Elkem 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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