Correlation Between Kongsberg Gruppen and Akva

Can any of the company-specific risk be diversified away by investing in both Kongsberg Gruppen and Akva 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 Kongsberg Gruppen and Akva into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kongsberg Gruppen ASA and Akva Group, you can compare the effects of market volatilities on Kongsberg Gruppen and Akva 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 Kongsberg Gruppen with a short position of Akva. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Gruppen and Akva.

Diversification Opportunities for Kongsberg Gruppen and Akva

0.92

Correlation Coefficient

Kongsberg Gruppen  Akva

Almost no diversification

The 3 months correlation between Kongsberg and Akva is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and Akva Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akva Group and Kongsberg Gruppen 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 Kongsberg Gruppen ASA are associated (or correlated) with Akva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akva Group has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and Akva go up and down completely randomly.

Pair Corralation between Kongsberg Gruppen and Akva

Assuming the 90 days trading horizon Kongsberg Gruppen ASA is expected to generate 0.96 times more return on investment than Akva. However, Kongsberg Gruppen ASA is 1.05 times less risky than Akva. It trades about 0.2 of its potential returns per unit of risk. Akva Group is currently generating about 0.13 per unit of risk. If you would invest  102,443  in Kongsberg Gruppen ASA on September 26, 2024 and sell it today you would earn a total of  26,657  from holding Kongsberg Gruppen ASA or generate 26.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Kongsberg Gruppen ASA  vs.  Akva Group

Kongsberg Gruppen ASA

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kongsberg Gruppen ASA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Kongsberg Gruppen disclosed solid returns over the last few months and may actually be approaching a breakup point.

Akva Group

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Akva Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Akva disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kongsberg Gruppen and Akva

The main advantage of trading using opposite Kongsberg Gruppen and Akva positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Gruppen position performs unexpectedly, Akva 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 Akva will offset losses from the drop in Akva's long position.

The idea behind Kongsberg Gruppen ASA and Akva Group 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.