Correlation Between Konsolidator and Penneo AS

Can any of the company-specific risk be diversified away by investing in both Konsolidator and Penneo AS 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 Konsolidator and Penneo AS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Konsolidator AS and Penneo AS, you can compare the effects of market volatilities on Konsolidator and Penneo AS 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 Konsolidator with a short position of Penneo AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Konsolidator and Penneo AS.

Diversification Opportunities for Konsolidator and Penneo AS

0.19

Correlation Coefficient

Konsolidator  Penneo AS

Average diversification

The 3 months correlation between Konsolidator and Penneo is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Konsolidator AS and Penneo AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penneo AS and Konsolidator 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 Konsolidator AS are associated (or correlated) with Penneo AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penneo AS has no effect on the direction of Konsolidator i.e., Konsolidator and Penneo AS go up and down completely randomly.

Pair Corralation between Konsolidator and Penneo AS

Assuming the 90 days trading horizon Konsolidator AS is expected to generate 2.38 times more return on investment than Penneo AS. However, Konsolidator is 2.38 times more volatile than Penneo AS. It trades about -0.03 of its potential returns per unit of risk. Penneo AS is currently generating about -0.14 per unit of risk. If you would invest  380.00  in Konsolidator AS on January 31, 2024 and sell it today you would lose (26.00) from holding Konsolidator AS or give up 6.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Konsolidator AS  vs.  Penneo AS

Konsolidator AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Konsolidator AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Konsolidator may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Penneo AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Penneo AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Konsolidator and Penneo AS

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

The idea behind Konsolidator AS and Penneo AS 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.