Correlation Between Techstep ASA and Archer

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

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

Diversification Opportunities for Techstep ASA and Archer

-0.17

Correlation Coefficient

Techstep ASA  Archer

Good diversification

The 3 months correlation between Techstep and Archer is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Techstep ASA and Archer Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Limited and Techstep 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 Techstep ASA are associated (or correlated) with Archer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Limited has no effect on the direction of Techstep ASA i.e., Techstep ASA and Archer go up and down completely randomly.

Pair Corralation between Techstep ASA and Archer

Assuming the 90 days trading horizon Techstep ASA is expected to generate 1.59 times more return on investment than Archer. However, Techstep ASA is 1.59 times more volatile than Archer Limited. It trades about 0.12 of its potential returns per unit of risk. Archer Limited is currently generating about 0.02 per unit of risk. If you would invest  1,120  in Techstep ASA on September 25, 2024 and sell it today you would earn a total of  260.00  from holding Techstep ASA or generate 23.21% return on investment over 90 days.

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

Techstep ASA  vs.  Archer Limited

Techstep ASA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Techstep ASA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Techstep ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Archer Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Archer Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Archer is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Techstep ASA and Archer

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

The idea behind Techstep ASA and Archer Limited 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.