Correlation Between Solstad Offsho and Kongsberg Gruppen
Can any of the company-specific risk be diversified away by investing in both Solstad Offsho 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 Solstad Offsho and Kongsberg Gruppen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solstad Offsho and Kongsberg Gruppen ASA, you can compare the effects of market volatilities on Solstad Offsho 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 Solstad Offsho with a short position of Kongsberg Gruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offsho and Kongsberg Gruppen.
Diversification Opportunities for Solstad Offsho and Kongsberg Gruppen
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Solstad and Kongsberg is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offsho 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 Solstad Offsho 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 Solstad Offsho 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 Solstad Offsho i.e., Solstad Offsho and Kongsberg Gruppen go up and down completely randomly.
Pair Corralation between Solstad Offsho and Kongsberg Gruppen
Assuming the 90 days trading horizon Solstad Offsho is expected to generate 1.28 times more return on investment than Kongsberg Gruppen. However, Solstad Offsho is 1.28 times more volatile than Kongsberg Gruppen ASA. It trades about 0.01 of its potential returns per unit of risk. Kongsberg Gruppen ASA is currently generating about -0.09 per unit of risk. If you would invest 4,000 in Solstad Offsho on October 22, 2024 and sell it today you would earn a total of 6.00 from holding Solstad Offsho or generate 0.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solstad Offsho vs. Kongsberg Gruppen ASA
Performance |
| Timeline |
| Solstad Offsho |
| Kongsberg Gruppen ASA |
Solstad Offsho and Kongsberg Gruppen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offsho and Kongsberg Gruppen
The main advantage of trading using opposite Solstad Offsho and Kongsberg Gruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offsho 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.| Solstad Offsho vs. Havila Shipping ASA | Solstad Offsho vs. Prosafe SE | Solstad Offsho vs. Eidesvik Offshore ASA |
| Kongsberg Gruppen vs. DnB ASA | Kongsberg Gruppen vs. Orkla ASA | Kongsberg Gruppen vs. Storebrand ASA | Kongsberg Gruppen vs. Yara International 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |