Correlation Between Oslo Exchange and Olav Thon

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

By analyzing existing cross correlation between Oslo Exchange Mutual and Olav Thon Eien, you can compare the effects of market volatilities on Oslo Exchange and Olav Thon 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 Oslo Exchange with a short position of Olav Thon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oslo Exchange and Olav Thon.

Diversification Opportunities for Oslo Exchange and Olav Thon

-0.55

Correlation Coefficient

Oslo Exchange  Olav Thon

Excellent diversification

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

Pair Corralation between Oslo Exchange and Olav Thon

Assuming the 90 days trading horizon Oslo Exchange Mutual is expected to under-perform the Olav Thon. But the index apears to be less risky and, when comparing its historical volatility, Oslo Exchange Mutual is 1.32 times less risky than Olav Thon. The index trades about -0.02 of its potential returns per unit of risk. The Olav Thon Eien is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  22,600  in Olav Thon Eien on September 24, 2024 and sell it today you would lose (100.00) from holding Olav Thon Eien or give up 0.44% of portfolio value over 90 days.

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

Oslo Exchange Mutual  vs.  Olav Thon Eien

Pair Trading with Oslo Exchange and Olav Thon

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

The idea behind Oslo Exchange Mutual and Olav Thon Eien 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.