Correlation Between KLP AksjeGlobal and KLP AksjeNorge

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

By analyzing existing cross correlation between KLP AksjeGlobal Indeks and KLP AksjeNorge Indeks, you can compare the effects of market volatilities on KLP AksjeGlobal and KLP AksjeNorge 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 KLP AksjeGlobal with a short position of KLP AksjeNorge. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLP AksjeGlobal and KLP AksjeNorge.

Diversification Opportunities for KLP AksjeGlobal and KLP AksjeNorge

0.12

Correlation Coefficient

KLP AksjeGlobal  KLP AksjeNorge

Average diversification

The 3 months correlation between KLP and KLP is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding KLP AksjeGlobal Indeks and KLP AksjeNorge Indeks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLP AksjeNorge Indeks and KLP AksjeGlobal 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 KLP AksjeGlobal Indeks are associated (or correlated) with KLP AksjeNorge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLP AksjeNorge Indeks has no effect on the direction of KLP AksjeGlobal i.e., KLP AksjeGlobal and KLP AksjeNorge go up and down completely randomly.

Pair Corralation between KLP AksjeGlobal and KLP AksjeNorge

Assuming the 90 days trading horizon KLP AksjeGlobal is expected to generate 1.18 times less return on investment than KLP AksjeNorge. But when comparing it to its historical volatility, KLP AksjeGlobal Indeks is 1.09 times less risky than KLP AksjeNorge. It trades about 0.07 of its potential returns per unit of risk. KLP AksjeNorge Indeks is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  382,029  in KLP AksjeNorge Indeks on October 23, 2024 and sell it today you would earn a total of  12,000  from holding KLP AksjeNorge Indeks or generate 3.14% return on investment over 90 days.

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

KLP AksjeGlobal Indeks  vs.  KLP AksjeNorge Indeks

KLP AksjeGlobal Indeks

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KLP AksjeGlobal Indeks are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, KLP AksjeGlobal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

KLP AksjeNorge Indeks

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KLP AksjeNorge Indeks are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong technical indicators, KLP AksjeNorge is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with KLP AksjeGlobal and KLP AksjeNorge

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

The idea behind KLP AksjeGlobal Indeks and KLP AksjeNorge Indeks 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.