Correlation Between Var Energi and Kmc Properties

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

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

Diversification Opportunities for Var Energi and Kmc Properties

-0.72

Correlation Coefficient

Var Energi  Kmc Properties

Pay attention - limited upside

The 3 months correlation between Var and Kmc is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Var Energi ASA and Kmc Properties ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kmc Properties ASA and Var Energi 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 Var Energi ASA are associated (or correlated) with Kmc Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kmc Properties ASA has no effect on the direction of Var Energi i.e., Var Energi and Kmc Properties go up and down completely randomly.

Pair Corralation between Var Energi and Kmc Properties

Assuming the 90 days trading horizon Var Energi ASA is expected to generate 0.08 times more return on investment than Kmc Properties. However, Var Energi ASA is 12.86 times less risky than Kmc Properties. It trades about 0.14 of its potential returns per unit of risk. Kmc Properties ASA is currently generating about -0.26 per unit of risk. If you would invest  3,335  in Var Energi ASA on September 13, 2024 and sell it today you would earn a total of  175.00  from holding Var Energi ASA or generate 5.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Var Energi ASA  vs.  Kmc Properties ASA

Var Energi ASA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Var Energi ASA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Var Energi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kmc Properties ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kmc Properties ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Var Energi and Kmc Properties

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

The idea behind Var Energi ASA and Kmc Properties 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.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.