Correlation Between KLP Aksje and KLP AksjeEuropa

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

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

Diversification Opportunities for KLP Aksje and KLP AksjeEuropa

0.27

Correlation Coefficient

KLP Aksje  KLP AksjeEuropa

Modest diversification

The 3 months correlation between KLP and KLP is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding KLP Aksje Fremvoksende and KLP AksjeEuropa Indeks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLP AksjeEuropa Indeks and KLP Aksje 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 Aksje Fremvoksende are associated (or correlated) with KLP AksjeEuropa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLP AksjeEuropa Indeks has no effect on the direction of KLP Aksje i.e., KLP Aksje and KLP AksjeEuropa go up and down completely randomly.

Pair Corralation between KLP Aksje and KLP AksjeEuropa

Assuming the 90 days trading horizon KLP Aksje Fremvoksende is expected to generate 1.18 times more return on investment than KLP AksjeEuropa. However, KLP Aksje is 1.18 times more volatile than KLP AksjeEuropa Indeks. It trades about 0.16 of its potential returns per unit of risk. KLP AksjeEuropa Indeks is currently generating about 0.02 per unit of risk. If you would invest  167,995  in KLP Aksje Fremvoksende on September 16, 2024 and sell it today you would earn a total of  13,163  from holding KLP Aksje Fremvoksende or generate 7.84% return on investment over 90 days.

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

KLP Aksje Fremvoksende  vs.  KLP AksjeEuropa Indeks

KLP Aksje Fremvoksende

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KLP Aksje Fremvoksende are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather weak technical and fundamental indicators, KLP Aksje may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KLP AksjeEuropa Indeks

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KLP AksjeEuropa Indeks are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, KLP AksjeEuropa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KLP Aksje and KLP AksjeEuropa

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

The idea behind KLP Aksje Fremvoksende and KLP AksjeEuropa 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.