Correlation Between Kratos Defense and Kongsberg Gruppen
Can any of the company-specific risk be diversified away by investing in both Kratos Defense and Kongsberg Gruppen 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 Kratos Defense and Kongsberg Gruppen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kratos Defense Security and Kongsberg Gruppen ASA, you can compare the effects of market volatilities on Kratos Defense and Kongsberg Gruppen 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 Kratos Defense with a short position of Kongsberg Gruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kratos Defense and Kongsberg Gruppen.
Diversification Opportunities for Kratos Defense and Kongsberg Gruppen
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kratos and Kongsberg is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Kratos Defense Security and Kongsberg Gruppen ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kongsberg Gruppen ASA and Kratos Defense 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 Kratos Defense Security are associated (or correlated) with Kongsberg Gruppen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kongsberg Gruppen ASA has no effect on the direction of Kratos Defense i.e., Kratos Defense and Kongsberg Gruppen go up and down completely randomly.
Pair Corralation between Kratos Defense and Kongsberg Gruppen
Given the investment horizon of 90 days Kratos Defense Security is expected to generate 0.94 times more return on investment than Kongsberg Gruppen. However, Kratos Defense Security is 1.07 times less risky than Kongsberg Gruppen. It trades about 0.13 of its potential returns per unit of risk. Kongsberg Gruppen ASA is currently generating about 0.07 per unit of risk. If you would invest 2,330 in Kratos Defense Security on August 30, 2024 and sell it today you would earn a total of 365.00 from holding Kratos Defense Security or generate 15.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 93.18% |
| Values | Daily Returns |
Kratos Defense Security vs. Kongsberg Gruppen ASA
Performance |
| Timeline |
| Kratos Defense Security |
| Kongsberg Gruppen ASA |
Kratos Defense and Kongsberg Gruppen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kratos Defense and Kongsberg Gruppen
The main advantage of trading using opposite Kratos Defense and Kongsberg Gruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kratos Defense position performs unexpectedly, Kongsberg Gruppen 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 Kongsberg Gruppen will offset losses from the drop in Kongsberg Gruppen's long position.| Kratos Defense vs. Northrop Grumman | Kratos Defense vs. General Dynamics | Kratos Defense vs. Raytheon Technologies Corp | Kratos Defense vs. Huntington Ingalls Industries |
| Kongsberg Gruppen vs. Sturm Ruger | Kongsberg Gruppen vs. Ammo Inc | Kongsberg Gruppen vs. Kratos Defense Security | Kongsberg Gruppen vs. VSE Corporation |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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