Correlation Between Sturm Ruger and Kongsberg Gruppen

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

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

Diversification Opportunities for Sturm Ruger and Kongsberg Gruppen

-0.31

Correlation Coefficient

Sturm Ruger  Kongsberg Gruppen

Very good diversification

The 3 months correlation between Sturm and Kongsberg is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sturm Ruger and Kongsberg Gruppen ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kongsberg Gruppen ASA and Sturm Ruger 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 Sturm Ruger are associated (or correlated) with Kongsberg Gruppen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kongsberg Gruppen ASA has no effect on the direction of Sturm Ruger i.e., Sturm Ruger and Kongsberg Gruppen go up and down completely randomly.

Pair Corralation between Sturm Ruger and Kongsberg Gruppen

Considering the 90-day investment horizon Sturm Ruger is expected to under-perform the Kongsberg Gruppen. But the stock apears to be less risky and, when comparing its historical volatility, Sturm Ruger is 1.88 times less risky than Kongsberg Gruppen. The stock trades about -0.27 of its potential returns per unit of risk. The Kongsberg Gruppen ASA is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  11,376  in Kongsberg Gruppen ASA on October 10, 2024 and sell it today you would lose (685.00) from holding Kongsberg Gruppen ASA or give up 6.02% of portfolio value over 90 days.

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

Sturm Ruger  vs.  Kongsberg Gruppen ASA

Sturm Ruger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sturm Ruger has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Kongsberg Gruppen ASA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kongsberg Gruppen ASA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Kongsberg Gruppen is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sturm Ruger and Kongsberg Gruppen

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

The idea behind Sturm Ruger and Kongsberg Gruppen ASA 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.