Correlation Between Elkem ASA and SKAGEN AVKASTNING

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

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

Diversification Opportunities for Elkem ASA and SKAGEN AVKASTNING

-0.2

Correlation Coefficient

Elkem ASA  SKAGEN AVKASTNING

Good diversification

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

Pair Corralation between Elkem ASA and SKAGEN AVKASTNING

Assuming the 90 days trading horizon Elkem ASA is expected to generate 85.51 times more return on investment than SKAGEN AVKASTNING. However, Elkem ASA is 85.51 times more volatile than SKAGEN AVKASTNING. It trades about 0.06 of its potential returns per unit of risk. SKAGEN AVKASTNING is currently generating about 1.13 per unit of risk. If you would invest  1,731  in Elkem ASA on September 17, 2024 and sell it today you would earn a total of  114.00  from holding Elkem ASA or generate 6.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.97%
Values	Daily Returns

Elkem ASA  vs.  SKAGEN AVKASTNING

Elkem ASA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Elkem ASA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Elkem ASA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SKAGEN AVKASTNING

Risk-Adjusted Performance

89 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in SKAGEN AVKASTNING are ranked lower than 89 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, SKAGEN AVKASTNING is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Elkem ASA and SKAGEN AVKASTNING

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

The idea behind Elkem ASA and SKAGEN AVKASTNING 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.