Correlation Between REC Silicon and Kongsberg Automotive
Can any of the company-specific risk be diversified away by investing in both REC Silicon 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 REC Silicon and Kongsberg Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REC Silicon ASA and Kongsberg Automotive Holding, you can compare the effects of market volatilities on REC Silicon 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 REC Silicon with a short position of Kongsberg Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of REC Silicon and Kongsberg Automotive.
Diversification Opportunities for REC Silicon and Kongsberg Automotive
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between REC and Kongsberg is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding REC Silicon ASA and Kongsberg Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kongsberg Automotive and REC Silicon 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 REC Silicon ASA 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 REC Silicon i.e., REC Silicon and Kongsberg Automotive go up and down completely randomly.
Pair Corralation between REC Silicon and Kongsberg Automotive
Assuming the 90 days trading horizon REC Silicon ASA is expected to under-perform the Kongsberg Automotive. In addition to that, REC Silicon is 4.48 times more volatile than Kongsberg Automotive Holding. It trades about -0.09 of its total potential returns per unit of risk. Kongsberg Automotive Holding is currently generating about 0.09 per unit of volatility. If you would invest 155.00 in Kongsberg Automotive Holding on November 4, 2024 and sell it today you would earn a total of 15.00 from holding Kongsberg Automotive Holding or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
REC Silicon ASA vs. Kongsberg Automotive Holding
Performance |
| Timeline |
| REC Silicon ASA |
| Kongsberg Automotive |
REC Silicon and Kongsberg Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REC Silicon and Kongsberg Automotive
The main advantage of trading using opposite REC Silicon and Kongsberg Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REC Silicon 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.| REC Silicon vs. Aker Horizons AS | REC Silicon vs. MPC Container Ships | REC Silicon vs. Aker Carbon Capture | REC Silicon vs. Nordic Semiconductor 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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