Correlation Between Kongsberg Gruppen and Skue Sparebank
Can any of the company-specific risk be diversified away by investing in both Kongsberg Gruppen and Skue 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 Skue 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 Skue Sparebank, you can compare the effects of market volatilities on Kongsberg Gruppen and Skue 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 Skue Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Gruppen and Skue Sparebank.
Diversification Opportunities for Kongsberg Gruppen and Skue Sparebank
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kongsberg and Skue is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and Skue Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skue 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 Skue Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skue Sparebank has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and Skue Sparebank go up and down completely randomly.
Pair Corralation between Kongsberg Gruppen and Skue Sparebank
Assuming the 90 days trading horizon Kongsberg Gruppen ASA is expected to generate 1.45 times more return on investment than Skue Sparebank. However, Kongsberg Gruppen is 1.45 times more volatile than Skue Sparebank. It trades about 0.14 of its potential returns per unit of risk. Skue Sparebank is currently generating about 0.06 per unit of risk. If you would invest 39,754 in Kongsberg Gruppen ASA on September 12, 2024 and sell it today you would earn a total of 85,946 from holding Kongsberg Gruppen ASA or generate 216.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kongsberg Gruppen ASA vs. Skue Sparebank
Performance |
| Timeline |
| Kongsberg Gruppen ASA |
| Skue Sparebank |
Kongsberg Gruppen and Skue Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kongsberg Gruppen and Skue Sparebank
The main advantage of trading using opposite Kongsberg Gruppen and Skue Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Gruppen position performs unexpectedly, Skue 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 Skue Sparebank will offset losses from the drop in Skue Sparebank'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 |
| Skue Sparebank vs. Aurskog Sparebank | Skue Sparebank vs. Helgeland Sparebank | Skue Sparebank vs. Kongsberg Gruppen ASA | Skue Sparebank vs. Napatech AS |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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