Correlation Between Horisont Energi and Borregaard ASA

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

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

Diversification Opportunities for Horisont Energi and Borregaard ASA

0.48

Correlation Coefficient

Horisont Energi  Borregaard ASA

Very weak diversification

The 3 months correlation between Horisont and Borregaard is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Horisont Energi AS and Borregaard ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borregaard ASA and Horisont Energi 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 Horisont Energi AS are associated (or correlated) with Borregaard ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borregaard ASA has no effect on the direction of Horisont Energi i.e., Horisont Energi and Borregaard ASA go up and down completely randomly.

Pair Corralation between Horisont Energi and Borregaard ASA

Assuming the 90 days trading horizon Horisont Energi AS is expected to under-perform the Borregaard ASA. In addition to that, Horisont Energi is 4.0 times more volatile than Borregaard ASA. It trades about -0.29 of its total potential returns per unit of risk. Borregaard ASA is currently generating about -0.13 per unit of volatility. If you would invest  18,320  in Borregaard ASA on September 21, 2024 and sell it today you would lose (600.00) from holding Borregaard ASA or give up 3.28% of portfolio value over 90 days.

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

Horisont Energi AS  vs.  Borregaard ASA

Horisont Energi AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Horisont Energi AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Borregaard ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Borregaard ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Horisont Energi and Borregaard ASA

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

The idea behind Horisont Energi AS and Borregaard 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.