Correlation Between Entra ASA and Multiconsult

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

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

Diversification Opportunities for Entra ASA and Multiconsult

-0.84

Correlation Coefficient

Entra ASA  Multiconsult

Pay attention - limited upside

The 3 months correlation between Entra and Multiconsult is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Entra ASA and Multiconsult AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multiconsult AS and Entra 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 Entra ASA are associated (or correlated) with Multiconsult. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multiconsult AS has no effect on the direction of Entra ASA i.e., Entra ASA and Multiconsult go up and down completely randomly.

Pair Corralation between Entra ASA and Multiconsult

Assuming the 90 days trading horizon Entra ASA is expected to generate 2.61 times less return on investment than Multiconsult. In addition to that, Entra ASA is 1.08 times more volatile than Multiconsult AS. It trades about 0.04 of its total potential returns per unit of risk. Multiconsult AS is currently generating about 0.11 per unit of volatility. If you would invest  15,750  in Multiconsult AS on September 25, 2024 and sell it today you would earn a total of  3,550  from holding Multiconsult AS or generate 22.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.22%
Values	Daily Returns

Entra ASA  vs.  Multiconsult AS

Entra ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entra ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Multiconsult AS

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Multiconsult AS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Multiconsult may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Entra ASA and Multiconsult

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

The idea behind Entra ASA and Multiconsult 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.