Correlation Between Zalaris ASA and Kongsberg Automotive
Can any of the company-specific risk be diversified away by investing in both Zalaris ASA 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 Zalaris ASA and Kongsberg Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zalaris ASA and Kongsberg Automotive Holding, you can compare the effects of market volatilities on Zalaris ASA 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 Zalaris ASA with a short position of Kongsberg Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zalaris ASA and Kongsberg Automotive.
Diversification Opportunities for Zalaris ASA and Kongsberg Automotive
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Zalaris and Kongsberg is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Zalaris ASA and Kongsberg Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kongsberg Automotive and Zalaris ASA 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 Zalaris ASA 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 Zalaris ASA i.e., Zalaris ASA and Kongsberg Automotive go up and down completely randomly.
Pair Corralation between Zalaris ASA and Kongsberg Automotive
Assuming the 90 days trading horizon Zalaris ASA is expected to generate 2.22 times less return on investment than Kongsberg Automotive. But when comparing it to its historical volatility, Zalaris ASA is 2.78 times less risky than Kongsberg Automotive. It trades about 0.29 of its potential returns per unit of risk. Kongsberg Automotive Holding is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 150.00 in Kongsberg Automotive Holding on February 22, 2024 and sell it today you would earn a total of 24.00 from holding Kongsberg Automotive Holding or generate 16.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Zalaris ASA vs. Kongsberg Automotive Holding
Performance |
Timeline |
Zalaris ASA |
Kongsberg Automotive |
Zalaris ASA and Kongsberg Automotive Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Zalaris ASA and Kongsberg Automotive
The main advantage of trading using opposite Zalaris ASA and Kongsberg Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zalaris ASA 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.Zalaris ASA vs. NRC Group ASA | Zalaris ASA vs. Kitron ASA | Zalaris ASA vs. Kid ASA | Zalaris ASA vs. XXL 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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