Correlation Between Kongsberg Gruppen and Bouvet

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Kongsberg Gruppen and Bouvet 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 Bouvet 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 Bouvet, you can compare the effects of market volatilities on Kongsberg Gruppen and Bouvet 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 Bouvet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Gruppen and Bouvet.

Diversification Opportunities for Kongsberg Gruppen and Bouvet

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Kongsberg and Bouvet is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and Bouvet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouvet 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 Bouvet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bouvet has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and Bouvet go up and down completely randomly.

Pair Corralation between Kongsberg Gruppen and Bouvet

Assuming the 90 days trading horizon Kongsberg Gruppen ASA is expected to generate 1.42 times more return on investment than Bouvet. However, Kongsberg Gruppen is 1.42 times more volatile than Bouvet. It trades about 0.22 of its potential returns per unit of risk. Bouvet is currently generating about 0.12 per unit of risk. If you would invest  100,257  in Kongsberg Gruppen ASA on September 18, 2024 and sell it today you would earn a total of  28,843  from holding Kongsberg Gruppen ASA or generate 28.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Kongsberg Gruppen ASA  vs.  Bouvet

 Performance 
       Timeline  
Kongsberg Gruppen ASA 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Kongsberg Gruppen ASA are ranked lower than 17 (%) 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.
Bouvet 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Bouvet are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Bouvet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kongsberg Gruppen and Bouvet Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kongsberg Gruppen and Bouvet

The main advantage of trading using opposite Kongsberg Gruppen and Bouvet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Gruppen position performs unexpectedly, Bouvet 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 Bouvet will offset losses from the drop in Bouvet's long position.
The idea behind Kongsberg Gruppen ASA and Bouvet 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

Other Complementary Tools

Money Managers
Screen money managers from public funds and ETFs managed around the world
Equity Valuation
Check real value of public entities based on technical and fundamental data
USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments