Correlation Between Next Biometrics and Kongsberg Automotive

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

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

Diversification Opportunities for Next Biometrics and Kongsberg Automotive

0.77

Correlation Coefficient

Next Biometrics  Kongsberg Automotive

Poor diversification

The 3 months correlation between Next and Kongsberg is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Next Biometrics Group and Kongsberg Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kongsberg Automotive and Next Biometrics 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 Next Biometrics Group are associated (or correlated) with Kongsberg Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kongsberg Automotive has no effect on the direction of Next Biometrics i.e., Next Biometrics and Kongsberg Automotive go up and down completely randomly.

Pair Corralation between Next Biometrics and Kongsberg Automotive

Assuming the 90 days trading horizon Next Biometrics Group is expected to generate 0.92 times more return on investment than Kongsberg Automotive. However, Next Biometrics Group is 1.09 times less risky than Kongsberg Automotive. It trades about -0.19 of its potential returns per unit of risk. Kongsberg Automotive Holding is currently generating about -0.21 per unit of risk. If you would invest  694.00  in Next Biometrics Group on December 31, 2024 and sell it today you would lose (164.00) from holding Next Biometrics Group or give up 23.63% of portfolio value over 90 days.

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

Next Biometrics Group  vs.  Kongsberg Automotive Holding

Next Biometrics Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Next Biometrics Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Kongsberg Automotive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kongsberg Automotive Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Next Biometrics and Kongsberg Automotive

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

The idea behind Next Biometrics Group and Kongsberg Automotive Holding 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.