Correlation Between Kongsberg Gruppen and Pyrum Innovations

Can any of the company-specific risk be diversified away by investing in both Kongsberg Gruppen and Pyrum Innovations 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 Pyrum Innovations 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 Pyrum Innovations AG, you can compare the effects of market volatilities on Kongsberg Gruppen and Pyrum Innovations 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 Pyrum Innovations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Gruppen and Pyrum Innovations.

Diversification Opportunities for Kongsberg Gruppen and Pyrum Innovations

0.15

Correlation Coefficient

Kongsberg Gruppen  Pyrum Innovations

Average diversification

The 3 months correlation between Kongsberg and Pyrum is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and Pyrum Innovations AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyrum Innovations 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 Pyrum Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyrum Innovations has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and Pyrum Innovations go up and down completely randomly.

Pair Corralation between Kongsberg Gruppen and Pyrum Innovations

Assuming the 90 days trading horizon Kongsberg Gruppen ASA is expected to under-perform the Pyrum Innovations. But the stock apears to be less risky and, when comparing its historical volatility, Kongsberg Gruppen ASA is 1.1 times less risky than Pyrum Innovations. The stock trades about -0.09 of its potential returns per unit of risk. The Pyrum Innovations AG is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  33,900  in Pyrum Innovations AG on October 20, 2024 and sell it today you would earn a total of  500.00  from holding Pyrum Innovations AG or generate 1.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Kongsberg Gruppen ASA  vs.  Pyrum Innovations AG

Kongsberg Gruppen ASA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kongsberg Gruppen ASA are ranked lower than 9 (%) 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.

Pyrum Innovations

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pyrum Innovations AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Pyrum Innovations may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kongsberg Gruppen and Pyrum Innovations

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

The idea behind Kongsberg Gruppen ASA and Pyrum Innovations AG 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.