Correlation Between Yara International and Kongsberg Gruppen
Can any of the company-specific risk be diversified away by investing in both Yara International 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 Yara International and Kongsberg Gruppen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yara International ASA and Kongsberg Gruppen ASA, you can compare the effects of market volatilities on Yara International 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 Yara International with a short position of Kongsberg Gruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yara International and Kongsberg Gruppen.
Diversification Opportunities for Yara International and Kongsberg Gruppen
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Yara and Kongsberg is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Yara International ASA 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 Yara International 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 Yara International ASA 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 Yara International i.e., Yara International and Kongsberg Gruppen go up and down completely randomly.
Pair Corralation between Yara International and Kongsberg Gruppen
Assuming the 90 days trading horizon Yara International is expected to generate 11.77 times less return on investment than Kongsberg Gruppen. But when comparing it to its historical volatility, Yara International ASA is 1.56 times less risky than Kongsberg Gruppen. It trades about 0.02 of its potential returns per unit of risk. Kongsberg Gruppen ASA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 107,908 in Kongsberg Gruppen ASA on September 2, 2024 and sell it today you would earn a total of 21,992 from holding Kongsberg Gruppen ASA or generate 20.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Yara International ASA vs. Kongsberg Gruppen ASA
Performance |
Timeline |
Yara International ASA |
Kongsberg Gruppen ASA |
Yara International and Kongsberg Gruppen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Yara International and Kongsberg Gruppen
The main advantage of trading using opposite Yara International and Kongsberg Gruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yara International 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.Yara International vs. Telenor ASA | Yara International vs. Orkla ASA | Yara International vs. DnB ASA | Yara International vs. Storebrand ASA |
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Check out your portfolio center.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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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