Correlation Between KLP Aksje and Storebrand Global

Can any of the company-specific risk be diversified away by investing in both KLP Aksje and Storebrand Global 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 Storebrand Global 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 Storebrand Global Solutions, you can compare the effects of market volatilities on KLP Aksje and Storebrand Global 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 Storebrand Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLP Aksje and Storebrand Global.

Diversification Opportunities for KLP Aksje and Storebrand Global

0.8

Correlation Coefficient

KLP Aksje  Storebrand Global

Very poor diversification

The 3 months correlation between KLP and Storebrand is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding KLP Aksje Fremvoksende and Storebrand Global Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storebrand Global 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 Storebrand Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storebrand Global has no effect on the direction of KLP Aksje i.e., KLP Aksje and Storebrand Global go up and down completely randomly.

Pair Corralation between KLP Aksje and Storebrand Global

Assuming the 90 days trading horizon KLP Aksje Fremvoksende is expected to generate 0.97 times more return on investment than Storebrand Global. However, KLP Aksje Fremvoksende is 1.03 times less risky than Storebrand Global. It trades about 0.11 of its potential returns per unit of risk. Storebrand Global Solutions is currently generating about 0.07 per unit of risk. If you would invest  168,154  in KLP Aksje Fremvoksende on September 2, 2024 and sell it today you would earn a total of  8,881  from holding KLP Aksje Fremvoksende or generate 5.28% return on investment over 90 days.

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

KLP Aksje Fremvoksende  vs.  Storebrand Global Solutions

KLP Aksje Fremvoksende

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KLP Aksje Fremvoksende are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, KLP Aksje is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Storebrand Global

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Storebrand Global Solutions are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, Storebrand Global is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with KLP Aksje and Storebrand Global

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

The idea behind KLP Aksje Fremvoksende and Storebrand Global Solutions 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.