Correlation Between Kongsberg Gruppen and Scatec Solar

Can any of the company-specific risk be diversified away by investing in both Kongsberg Gruppen and Scatec Solar 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 Scatec Solar 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 Scatec Solar OL, you can compare the effects of market volatilities on Kongsberg Gruppen and Scatec Solar 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 Scatec Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Gruppen and Scatec Solar.

Diversification Opportunities for Kongsberg Gruppen and Scatec Solar

0.0

Correlation Coefficient

Kongsberg Gruppen  Scatec Solar

Pay attention - limited upside

The 3 months correlation between Kongsberg and Scatec is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and Scatec Solar OL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scatec Solar OL 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 Scatec Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scatec Solar OL has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and Scatec Solar go up and down completely randomly.

Pair Corralation between Kongsberg Gruppen and Scatec Solar

If you would invest  8,320  in Scatec Solar OL on March 18, 2024 and sell it today you would earn a total of  0.00  from holding Scatec Solar OL or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Kongsberg Gruppen ASA  vs.  Scatec Solar OL

Kongsberg Gruppen ASA

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Kongsberg Gruppen ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Kongsberg Gruppen is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Scatec Solar OL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scatec Solar OL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Scatec Solar is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Kongsberg Gruppen and Scatec Solar

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

The idea behind Kongsberg Gruppen ASA and Scatec Solar OL 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.