Correlation Between Kongsberg Gruppen and Safran SA
Can any of the company-specific risk be diversified away by investing in both Kongsberg Gruppen and Safran SA 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 Kongsberg Gruppen and Safran SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kongsberg Gruppen ASA and Safran SA, you can compare the effects of market volatilities on Kongsberg Gruppen and Safran SA 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 Kongsberg Gruppen with a short position of Safran SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Gruppen and Safran SA.
Diversification Opportunities for Kongsberg Gruppen and Safran SA
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Kongsberg and Safran is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and Safran SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safran SA and Kongsberg Gruppen 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 Kongsberg Gruppen ASA are associated (or correlated) with Safran SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safran SA has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and Safran SA go up and down completely randomly.
Pair Corralation between Kongsberg Gruppen and Safran SA
Assuming the 90 days horizon Kongsberg Gruppen is expected to generate 1.21 times less return on investment than Safran SA. In addition to that, Kongsberg Gruppen is 1.3 times more volatile than Safran SA. It trades about 0.09 of its total potential returns per unit of risk. Safran SA is currently generating about 0.15 per unit of volatility. If you would invest 20,446 in Safran SA on January 19, 2024 and sell it today you would earn a total of 1,614 from holding Safran SA or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kongsberg Gruppen ASA vs. Safran SA
Performance |
| Timeline |
| Kongsberg Gruppen ASA |
| Safran SA |
Kongsberg Gruppen and Safran SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kongsberg Gruppen and Safran SA
The main advantage of trading using opposite Kongsberg Gruppen and Safran SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Gruppen position performs unexpectedly, Safran SA 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 Safran SA will offset losses from the drop in Safran SA's long position.| Kongsberg Gruppen vs. Raytheon Technologies Corp | Kongsberg Gruppen vs. Rolls Royce Holdings plc | Kongsberg Gruppen vs. Lockheed Martin | Kongsberg Gruppen vs. The Boeing |
| Safran SA vs. Raytheon Technologies Corp | Safran SA vs. Rolls Royce Holdings plc | Safran SA vs. Lockheed Martin | Safran SA vs. The Boeing |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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