Correlation Between VSE and Kongsberg Gruppen
Can any of the company-specific risk be diversified away by investing in both VSE 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 VSE and Kongsberg Gruppen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VSE Corporation and Kongsberg Gruppen ASA, you can compare the effects of market volatilities on VSE 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 VSE with a short position of Kongsberg Gruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of VSE and Kongsberg Gruppen.
Diversification Opportunities for VSE and Kongsberg Gruppen
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VSE and Kongsberg is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding VSE Corp. 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 VSE 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 VSE Corporation 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 VSE i.e., VSE and Kongsberg Gruppen go up and down completely randomly.
Pair Corralation between VSE and Kongsberg Gruppen
Given the investment horizon of 90 days VSE Corporation is expected to generate 0.83 times more return on investment than Kongsberg Gruppen. However, VSE Corporation is 1.21 times less risky than Kongsberg Gruppen. It trades about 0.24 of its potential returns per unit of risk. Kongsberg Gruppen ASA is currently generating about 0.01 per unit of risk. If you would invest 10,323 in VSE Corporation on September 2, 2024 and sell it today you would earn a total of 1,403 from holding VSE Corporation or generate 13.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
VSE Corp. vs. Kongsberg Gruppen ASA
Performance |
| Timeline |
| VSE Corporation |
| Kongsberg Gruppen ASA |
VSE and Kongsberg Gruppen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VSE and Kongsberg Gruppen
The main advantage of trading using opposite VSE and Kongsberg Gruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VSE 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.The idea behind VSE Corporation and Kongsberg Gruppen ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kongsberg Gruppen vs. Firan Technology Group | Kongsberg Gruppen vs. 808 Renewable Energy | Kongsberg Gruppen vs. Park Electrochemical | Kongsberg Gruppen vs. Innovative Solutions and |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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