Correlation Between Teco 2030 and Sunndal Sparebank

Can any of the company-specific risk be diversified away by investing in both Teco 2030 and Sunndal 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 Teco 2030 and Sunndal Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Teco 2030 Asa and Sunndal Sparebank, you can compare the effects of market volatilities on Teco 2030 and Sunndal 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 Teco 2030 with a short position of Sunndal Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teco 2030 and Sunndal Sparebank.

Diversification Opportunities for Teco 2030 and Sunndal Sparebank

-0.68

Correlation Coefficient

Teco 2030  Sunndal Sparebank

Excellent diversification

The 3 months correlation between Teco and Sunndal is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Teco 2030 Asa and Sunndal Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunndal Sparebank and Teco 2030 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 Teco 2030 Asa are associated (or correlated) with Sunndal Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunndal Sparebank has no effect on the direction of Teco 2030 i.e., Teco 2030 and Sunndal Sparebank go up and down completely randomly.

Pair Corralation between Teco 2030 and Sunndal Sparebank

Assuming the 90 days trading horizon Teco 2030 Asa is expected to generate 15.19 times more return on investment than Sunndal Sparebank. However, Teco 2030 is 15.19 times more volatile than Sunndal Sparebank. It trades about 0.02 of its potential returns per unit of risk. Sunndal Sparebank is currently generating about 0.13 per unit of risk. If you would invest  99.00  in Teco 2030 Asa on September 14, 2024 and sell it today you would lose (44.00) from holding Teco 2030 Asa or give up 44.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Teco 2030 Asa  vs.  Sunndal Sparebank

Teco 2030 Asa

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Teco 2030 Asa are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Teco 2030 disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sunndal Sparebank

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sunndal Sparebank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Sunndal Sparebank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Teco 2030 and Sunndal Sparebank

The main advantage of trading using opposite Teco 2030 and Sunndal Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teco 2030 position performs unexpectedly, Sunndal 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 Sunndal Sparebank will offset losses from the drop in Sunndal Sparebank's long position.

The idea behind Teco 2030 Asa and Sunndal Sparebank 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.