Correlation Between VSE and Kongsberg Gruppen

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

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

Diversification Opportunities for VSE and Kongsberg Gruppen

0.22

Correlation Coefficient

VSE  Kongsberg Gruppen

Modest diversification

The 3 months correlation between VSE and Kongsberg is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding VSE Corp. 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 VSE 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 VSE Corporation 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 VSE i.e., VSE and Kongsberg Gruppen go up and down completely randomly.

Pair Corralation between VSE and Kongsberg Gruppen

Given the investment horizon of 90 days VSE Corporation is expected to under-perform the Kongsberg Gruppen. In addition to that, VSE is 1.1 times more volatile than Kongsberg Gruppen ASA. It trades about -0.49 of its total potential returns per unit of risk. Kongsberg Gruppen ASA is currently generating about -0.14 per unit of volatility. 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 Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

VSE Corp.  vs.  Kongsberg Gruppen ASA

VSE Corporation

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VSE Corporation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, VSE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 VSE and Kongsberg Gruppen

The main advantage of trading using opposite VSE and Kongsberg Gruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VSE 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 VSE Corporation 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 Stocks Directory module to find actively traded stocks across global markets.