Correlation Between Kongsberg Gruppen and Cadeler As

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

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

Diversification Opportunities for Kongsberg Gruppen and Cadeler As

-0.63

Correlation Coefficient

Kongsberg Gruppen  Cadeler As

Excellent diversification

The 3 months correlation between Kongsberg and Cadeler is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and Cadeler As in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadeler As and Kongsberg Gruppen 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 Gruppen ASA are associated (or correlated) with Cadeler As. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadeler As has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and Cadeler As go up and down completely randomly.

Pair Corralation between Kongsberg Gruppen and Cadeler As

Assuming the 90 days trading horizon Kongsberg Gruppen ASA is expected to generate 1.43 times more return on investment than Cadeler As. However, Kongsberg Gruppen is 1.43 times more volatile than Cadeler As. It trades about 0.13 of its potential returns per unit of risk. Cadeler As is currently generating about -0.07 per unit of risk. If you would invest  109,398  in Kongsberg Gruppen ASA on September 13, 2024 and sell it today you would earn a total of  20,402  from holding Kongsberg Gruppen ASA or generate 18.65% return on investment over 90 days.

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

Kongsberg Gruppen ASA  vs.  Cadeler As

Kongsberg Gruppen ASA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kongsberg Gruppen ASA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Kongsberg Gruppen disclosed solid returns over the last few months and may actually be approaching a breakup point.

Cadeler As

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cadeler As has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Kongsberg Gruppen and Cadeler As

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

The idea behind Kongsberg Gruppen ASA and Cadeler As 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 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.