Correlation Between Bien Sparebank and Instabank ASA

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

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

Diversification Opportunities for Bien Sparebank and Instabank ASA

0.2

Correlation Coefficient

Bien Sparebank  Instabank ASA

Modest diversification

The 3 months correlation between Bien and Instabank is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bien Sparebank ASA and Instabank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instabank ASA and Bien Sparebank 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 Bien Sparebank ASA are associated (or correlated) with Instabank ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instabank ASA has no effect on the direction of Bien Sparebank i.e., Bien Sparebank and Instabank ASA go up and down completely randomly.

Pair Corralation between Bien Sparebank and Instabank ASA

Assuming the 90 days trading horizon Bien Sparebank ASA is expected to under-perform the Instabank ASA. In addition to that, Bien Sparebank is 1.44 times more volatile than Instabank ASA. It trades about -0.16 of its total potential returns per unit of risk. Instabank ASA is currently generating about 0.16 per unit of volatility. If you would invest  190.00  in Instabank ASA on September 26, 2024 and sell it today you would earn a total of  7.00  from holding Instabank ASA or generate 3.68% return on investment over 90 days.

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

Bien Sparebank ASA  vs.  Instabank ASA

Bien Sparebank ASA

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bien Sparebank ASA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Bien Sparebank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Instabank ASA

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Bien Sparebank and Instabank ASA

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

The idea behind Bien Sparebank ASA and Instabank 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.