Correlation Between AF Gruppen and Selvaag Bolig

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

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

Diversification Opportunities for AF Gruppen and Selvaag Bolig

-0.06

Correlation Coefficient

AF Gruppen  Selvaag Bolig

Good diversification

The 3 months correlation between AFG and Selvaag is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding AF Gruppen ASA and Selvaag Bolig ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selvaag Bolig ASA and AF 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 AF Gruppen ASA are associated (or correlated) with Selvaag Bolig. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selvaag Bolig ASA has no effect on the direction of AF Gruppen i.e., AF Gruppen and Selvaag Bolig go up and down completely randomly.

Pair Corralation between AF Gruppen and Selvaag Bolig

Assuming the 90 days trading horizon AF Gruppen is expected to generate 1.39 times less return on investment than Selvaag Bolig. But when comparing it to its historical volatility, AF Gruppen ASA is 1.69 times less risky than Selvaag Bolig. It trades about 0.25 of its potential returns per unit of risk. Selvaag Bolig ASA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  3,285  in Selvaag Bolig ASA on September 25, 2024 and sell it today you would earn a total of  280.00  from holding Selvaag Bolig ASA or generate 8.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

AF Gruppen ASA  vs.  Selvaag Bolig ASA

AF Gruppen ASA

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AF Gruppen ASA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, AF Gruppen disclosed solid returns over the last few months and may actually be approaching a breakup point.

Selvaag Bolig ASA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Selvaag Bolig ASA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Selvaag Bolig is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with AF Gruppen and Selvaag Bolig

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

The idea behind AF Gruppen ASA and Selvaag Bolig ASA 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 Transaction History module to view history of all your transactions and understand their impact on performance.