Correlation Between SD Standard and Grong Sparebank
Can any of the company-specific risk be diversified away by investing in both SD Standard and Grong 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 SD Standard and Grong Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SD Standard Drilling and Grong Sparebank, you can compare the effects of market volatilities on SD Standard and Grong 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 SD Standard with a short position of Grong Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of SD Standard and Grong Sparebank.
Diversification Opportunities for SD Standard and Grong Sparebank
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SDSD and Grong is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding SD Standard Drilling and Grong Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grong Sparebank and SD Standard 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 SD Standard Drilling are associated (or correlated) with Grong Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grong Sparebank has no effect on the direction of SD Standard i.e., SD Standard and Grong Sparebank go up and down completely randomly.
Pair Corralation between SD Standard and Grong Sparebank
Assuming the 90 days trading horizon SD Standard Drilling is expected to generate 0.72 times more return on investment than Grong Sparebank. However, SD Standard Drilling is 1.4 times less risky than Grong Sparebank. It trades about 0.1 of its potential returns per unit of risk. Grong Sparebank is currently generating about 0.04 per unit of risk. If you would invest 161.00 in SD Standard Drilling on September 13, 2024 and sell it today you would earn a total of 9.00 from holding SD Standard Drilling or generate 5.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SD Standard Drilling vs. Grong Sparebank
Performance |
Timeline |
SD Standard Drilling |
Grong Sparebank |
SD Standard and Grong Sparebank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SD Standard and Grong Sparebank
The main advantage of trading using opposite SD Standard and Grong Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SD Standard position performs unexpectedly, Grong 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 Grong Sparebank will offset losses from the drop in Grong Sparebank's long position.SD Standard vs. Solstad Offsho | SD Standard vs. Prosafe SE | SD Standard vs. BW Offshore | SD Standard vs. Kongsberg Gruppen ASA |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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