Correlation Between Sparebanken Sor and Crayon Group

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

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

Diversification Opportunities for Sparebanken Sor and Crayon Group

-0.5

Correlation Coefficient

Sparebanken Sor  Crayon Group

Very good diversification

The 3 months correlation between Sparebanken and Crayon is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Sor and Crayon Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crayon Group Holding and Sparebanken Sor 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 Sparebanken Sor are associated (or correlated) with Crayon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crayon Group Holding has no effect on the direction of Sparebanken Sor i.e., Sparebanken Sor and Crayon Group go up and down completely randomly.

Pair Corralation between Sparebanken Sor and Crayon Group

Assuming the 90 days trading horizon Sparebanken Sor is expected to generate 3.65 times less return on investment than Crayon Group. But when comparing it to its historical volatility, Sparebanken Sor is 3.4 times less risky than Crayon Group. It trades about 0.07 of its potential returns per unit of risk. Crayon Group Holding is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  11,190  in Crayon Group Holding on September 13, 2024 and sell it today you would earn a total of  1,510  from holding Crayon Group Holding or generate 13.49% return on investment over 90 days.

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

Sparebanken Sor  vs.  Crayon Group Holding

Sparebanken Sor

Risk-Adjusted Performance

5 of 100

Modest

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

Crayon Group Holding

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crayon Group Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Crayon Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sparebanken Sor and Crayon Group

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

The idea behind Sparebanken Sor and Crayon Group Holding 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.