Correlation Between Next Biometrics and Kongsberg Automotive
Can any of the company-specific risk be diversified away by investing in both Next Biometrics and Kongsberg Automotive 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 Next Biometrics and Kongsberg Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Next Biometrics Group and Kongsberg Automotive Holding, you can compare the effects of market volatilities on Next Biometrics and Kongsberg Automotive 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 Next Biometrics with a short position of Kongsberg Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Biometrics and Kongsberg Automotive.
Diversification Opportunities for Next Biometrics and Kongsberg Automotive
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Next and Kongsberg is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Next Biometrics Group and Kongsberg Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kongsberg Automotive and Next Biometrics 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 Next Biometrics Group are associated (or correlated) with Kongsberg Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kongsberg Automotive has no effect on the direction of Next Biometrics i.e., Next Biometrics and Kongsberg Automotive go up and down completely randomly.
Pair Corralation between Next Biometrics and Kongsberg Automotive
Assuming the 90 days trading horizon Next Biometrics Group is expected to generate 0.96 times more return on investment than Kongsberg Automotive. However, Next Biometrics Group is 1.04 times less risky than Kongsberg Automotive. It trades about 0.04 of its potential returns per unit of risk. Kongsberg Automotive Holding is currently generating about -0.03 per unit of risk. If you would invest 454.00 in Next Biometrics Group on August 28, 2024 and sell it today you would earn a total of 196.00 from holding Next Biometrics Group or generate 43.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next Biometrics Group vs. Kongsberg Automotive Holding
Performance |
| Timeline |
| Next Biometrics Group |
| Kongsberg Automotive |
Next Biometrics and Kongsberg Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Biometrics and Kongsberg Automotive
The main advantage of trading using opposite Next Biometrics and Kongsberg Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Biometrics position performs unexpectedly, Kongsberg Automotive 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 Automotive will offset losses from the drop in Kongsberg Automotive's long position.| Next Biometrics vs. REC Silicon ASA | Next Biometrics vs. Aker Horizons AS | Next Biometrics vs. Saga Pure 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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