Correlation Between Europris ASA and Gjensidige Forsikring

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

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

Diversification Opportunities for Europris ASA and Gjensidige Forsikring

0.81

Correlation Coefficient

Europris ASA  Gjensidige Forsikring

Very poor diversification

The 3 months correlation between Europris and Gjensidige is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Europris ASA and Gjensidige Forsikring ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gjensidige Forsikring ASA and Europris 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 Europris ASA are associated (or correlated) with Gjensidige Forsikring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gjensidige Forsikring ASA has no effect on the direction of Europris ASA i.e., Europris ASA and Gjensidige Forsikring go up and down completely randomly.

Pair Corralation between Europris ASA and Gjensidige Forsikring

Assuming the 90 days trading horizon Europris ASA is expected to generate 1.35 times more return on investment than Gjensidige Forsikring. However, Europris ASA is 1.35 times more volatile than Gjensidige Forsikring ASA. It trades about 0.14 of its potential returns per unit of risk. Gjensidige Forsikring ASA is currently generating about 0.07 per unit of risk. If you would invest  6,450  in Europris ASA on September 12, 2024 and sell it today you would earn a total of  790.00  from holding Europris ASA or generate 12.25% return on investment over 90 days.

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

Europris ASA  vs.  Gjensidige Forsikring ASA

Europris ASA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Europris ASA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Europris ASA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gjensidige Forsikring ASA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gjensidige Forsikring ASA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Gjensidige Forsikring is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Europris ASA and Gjensidige Forsikring

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

The idea behind Europris ASA and Gjensidige Forsikring 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.