Correlation Between Helgeland Sparebank and Circa Group

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

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

Diversification Opportunities for Helgeland Sparebank and Circa Group

0.55

Correlation Coefficient

Helgeland Sparebank  Circa Group

Very weak diversification

The 3 months correlation between Helgeland and Circa is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Helgeland Sparebank and Circa Group AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Circa Group AS and Helgeland 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 Helgeland Sparebank are associated (or correlated) with Circa Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Circa Group AS has no effect on the direction of Helgeland Sparebank i.e., Helgeland Sparebank and Circa Group go up and down completely randomly.

Pair Corralation between Helgeland Sparebank and Circa Group

Assuming the 90 days trading horizon Helgeland Sparebank is expected to generate 4.55 times less return on investment than Circa Group. But when comparing it to its historical volatility, Helgeland Sparebank is 3.27 times less risky than Circa Group. It trades about 0.07 of its potential returns per unit of risk. Circa Group AS is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Circa Group AS on September 5, 2024 and sell it today you would earn a total of  14.00  from holding Circa Group AS or generate 28.0% return on investment over 90 days.

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

Helgeland Sparebank  vs.  Circa Group AS

Helgeland Sparebank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Helgeland Sparebank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Helgeland Sparebank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Circa Group AS

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Circa Group AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Circa Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Helgeland Sparebank and Circa Group

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

The idea behind Helgeland Sparebank and Circa Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.