Correlation Between Kongsberg Gruppen and Romsdal Sparebank
Can any of the company-specific risk be diversified away by investing in both Kongsberg Gruppen and Romsdal Sparebank 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 Romsdal Sparebank 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 Romsdal Sparebank, you can compare the effects of market volatilities on Kongsberg Gruppen and Romsdal Sparebank 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 Romsdal Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Gruppen and Romsdal Sparebank.
Diversification Opportunities for Kongsberg Gruppen and Romsdal Sparebank
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kongsberg and Romsdal is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and Romsdal Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romsdal Sparebank 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 Romsdal Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romsdal Sparebank has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and Romsdal Sparebank go up and down completely randomly.
Pair Corralation between Kongsberg Gruppen and Romsdal Sparebank
Assuming the 90 days trading horizon Kongsberg Gruppen ASA is expected to generate 1.82 times more return on investment than Romsdal Sparebank. However, Kongsberg Gruppen is 1.82 times more volatile than Romsdal Sparebank. It trades about 0.17 of its potential returns per unit of risk. Romsdal Sparebank is currently generating about 0.05 per unit of risk. If you would invest 65,903 in Kongsberg Gruppen ASA on December 4, 2024 and sell it today you would earn a total of 92,297 from holding Kongsberg Gruppen ASA or generate 140.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kongsberg Gruppen ASA vs. Romsdal Sparebank
Performance |
| Timeline |
| Kongsberg Gruppen ASA |
| Romsdal Sparebank |
Kongsberg Gruppen and Romsdal Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kongsberg Gruppen and Romsdal Sparebank
The main advantage of trading using opposite Kongsberg Gruppen and Romsdal Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Gruppen position performs unexpectedly, Romsdal Sparebank 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 Romsdal Sparebank will offset losses from the drop in Romsdal Sparebank's long position.| Kongsberg Gruppen vs. DnB ASA | Kongsberg Gruppen vs. Orkla ASA | Kongsberg Gruppen vs. Storebrand ASA | Kongsberg Gruppen vs. Yara International ASA |
| Romsdal Sparebank vs. Sunndal Sparebank | Romsdal Sparebank vs. Nordic Semiconductor ASA | Romsdal Sparebank vs. Kraft Bank Asa | Romsdal Sparebank vs. Romerike Sparebank |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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