Correlation Between Mowi ASA and SpareBank

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

By analyzing existing cross correlation between Mowi ASA and SpareBank 1 Sr Norge, you can compare the effects of market volatilities on Mowi ASA and SpareBank 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 Mowi ASA with a short position of SpareBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mowi ASA and SpareBank.

Diversification Opportunities for Mowi ASA and SpareBank

0.69

Correlation Coefficient

Mowi ASA  SpareBank

Poor diversification

The 3 months correlation between Mowi and SpareBank is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Mowi ASA and SpareBank 1 Sr Norge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpareBank 1 Sr and Mowi 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 Mowi ASA are associated (or correlated) with SpareBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SpareBank 1 Sr has no effect on the direction of Mowi ASA i.e., Mowi ASA and SpareBank go up and down completely randomly.

Pair Corralation between Mowi ASA and SpareBank

Assuming the 90 days trading horizon Mowi ASA is expected to under-perform the SpareBank. But the stock apears to be less risky and, when comparing its historical volatility, Mowi ASA is 1.16 times less risky than SpareBank. The stock trades about -0.23 of its potential returns per unit of risk. The SpareBank 1 Sr Norge is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  14,780  in SpareBank 1 Sr Norge on September 26, 2024 and sell it today you would lose (420.00) from holding SpareBank 1 Sr Norge or give up 2.84% of portfolio value over 90 days.

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

Mowi ASA  vs.  SpareBank 1 Sr Norge

Mowi ASA

Risk-Adjusted Performance

5 of 100

Modest

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

SpareBank 1 Sr

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SpareBank 1 Sr Norge are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, SpareBank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mowi ASA and SpareBank

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

The idea behind Mowi ASA and SpareBank 1 Sr Norge 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.