Correlation Between Kongsberg Automotive and Integrated Wind

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

By analyzing existing cross correlation between Kongsberg Automotive Holding and Integrated Wind Solutions, you can compare the effects of market volatilities on Kongsberg Automotive and Integrated Wind 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 Automotive with a short position of Integrated Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Automotive and Integrated Wind.

Diversification Opportunities for Kongsberg Automotive and Integrated Wind

-0.13

Correlation Coefficient

Kongsberg Automotive  Integrated Wind

Good diversification

The 3 months correlation between Kongsberg and Integrated is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Automotive Holding and Integrated Wind Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Wind Solutions and Kongsberg Automotive 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 Automotive Holding are associated (or correlated) with Integrated Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Wind Solutions has no effect on the direction of Kongsberg Automotive i.e., Kongsberg Automotive and Integrated Wind go up and down completely randomly.

Pair Corralation between Kongsberg Automotive and Integrated Wind

Assuming the 90 days trading horizon Kongsberg Automotive Holding is expected to generate 1.64 times more return on investment than Integrated Wind. However, Kongsberg Automotive is 1.64 times more volatile than Integrated Wind Solutions. It trades about 0.07 of its potential returns per unit of risk. Integrated Wind Solutions is currently generating about -0.02 per unit of risk. If you would invest  132.00  in Kongsberg Automotive Holding on September 3, 2024 and sell it today you would earn a total of  18.00  from holding Kongsberg Automotive Holding or generate 13.64% return on investment over 90 days.

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

Kongsberg Automotive Holding  vs.  Integrated Wind Solutions

Kongsberg Automotive

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kongsberg Automotive Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Kongsberg Automotive disclosed solid returns over the last few months and may actually be approaching a breakup point.

Integrated Wind Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integrated Wind Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Integrated Wind is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Kongsberg Automotive and Integrated Wind

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

The idea behind Kongsberg Automotive Holding and Integrated Wind 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.