Correlation Between Akva and SpareBank
Can any of the company-specific risk be diversified away by investing in both Akva and SpareBank 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 Akva and SpareBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akva Group and SpareBank 1 Sr Norge, you can compare the effects of market volatilities on Akva and SpareBank 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 Akva with a short position of SpareBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akva and SpareBank.
Diversification Opportunities for Akva and SpareBank
Poor diversification
The 3 months correlation between Akva and SpareBank is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Akva Group and SpareBank 1 Sr Norge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpareBank 1 Sr and Akva 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 Akva Group are associated (or correlated) with SpareBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SpareBank 1 Sr has no effect on the direction of Akva i.e., Akva and SpareBank go up and down completely randomly.
Pair Corralation between Akva and SpareBank
Assuming the 90 days trading horizon Akva Group is expected to generate 1.72 times more return on investment than SpareBank. However, Akva is 1.72 times more volatile than SpareBank 1 Sr Norge. It trades about 0.13 of its potential returns per unit of risk. SpareBank 1 Sr Norge is currently generating about 0.11 per unit of risk. If you would invest 5,820 in Akva Group on September 26, 2024 and sell it today you would earn a total of 920.00 from holding Akva Group or generate 15.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Akva Group vs. SpareBank 1 Sr Norge
Performance |
Timeline |
Akva Group |
SpareBank 1 Sr |
Akva and SpareBank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Akva and SpareBank
The main advantage of trading using opposite Akva and SpareBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akva position performs unexpectedly, SpareBank 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 SpareBank will offset losses from the drop in SpareBank's long position.The idea behind Akva Group and SpareBank 1 Sr Norge 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.SpareBank vs. Nordic Semiconductor ASA | SpareBank vs. Aurskog Sparebank | SpareBank vs. Lea Bank ASA | SpareBank vs. Odfjell Technology |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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