Correlation Between Airbus Group and Kongsberg Gruppen
Can any of the company-specific risk be diversified away by investing in both Airbus Group 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 Airbus Group and Kongsberg Gruppen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airbus Group SE and Kongsberg Gruppen ASA, you can compare the effects of market volatilities on Airbus Group 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 Airbus Group with a short position of Kongsberg Gruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airbus Group and Kongsberg Gruppen.
Diversification Opportunities for Airbus Group and Kongsberg Gruppen
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Airbus and Kongsberg is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Airbus Group SE 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 Airbus Group 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 Airbus Group SE 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 Airbus Group i.e., Airbus Group and Kongsberg Gruppen go up and down completely randomly.
Pair Corralation between Airbus Group and Kongsberg Gruppen
Assuming the 90 days horizon Airbus Group SE is expected to under-perform the Kongsberg Gruppen. In addition to that, Airbus Group is 1.34 times more volatile than Kongsberg Gruppen ASA. It trades about -0.15 of its total potential returns per unit of risk. Kongsberg Gruppen ASA is currently generating about 0.07 per unit of volatility. If you would invest 6,767 in Kongsberg Gruppen ASA on February 5, 2024 and sell it today you would earn a total of 133.00 from holding Kongsberg Gruppen ASA or generate 1.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Airbus Group SE vs. Kongsberg Gruppen ASA
Performance |
Timeline |
Airbus Group SE |
Kongsberg Gruppen ASA |
Airbus Group and Kongsberg Gruppen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Airbus Group and Kongsberg Gruppen
The main advantage of trading using opposite Airbus Group and Kongsberg Gruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airbus Group 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.Airbus Group vs. Raytheon Technologies Corp | Airbus Group vs. Lockheed Martin | Airbus Group vs. The Boeing | Airbus Group vs. General Dynamics |
Kongsberg Gruppen vs. Raytheon Technologies Corp | Kongsberg Gruppen vs. Lockheed Martin | Kongsberg Gruppen vs. The Boeing | Kongsberg Gruppen vs. General Dynamics |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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