Correlation Between Veidekke ASA and Entra ASA

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

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

Diversification Opportunities for Veidekke ASA and Entra ASA

-0.65

Correlation Coefficient

Veidekke ASA  Entra ASA

Excellent diversification

The 3 months correlation between Veidekke and Entra is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Veidekke ASA and Entra ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entra ASA and Veidekke 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 Veidekke ASA are associated (or correlated) with Entra ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entra ASA has no effect on the direction of Veidekke ASA i.e., Veidekke ASA and Entra ASA go up and down completely randomly.

Pair Corralation between Veidekke ASA and Entra ASA

Assuming the 90 days trading horizon Veidekke ASA is expected to generate 0.66 times more return on investment than Entra ASA. However, Veidekke ASA is 1.52 times less risky than Entra ASA. It trades about 0.21 of its potential returns per unit of risk. Entra ASA is currently generating about -0.16 per unit of risk. If you would invest  12,280  in Veidekke ASA on September 20, 2024 and sell it today you would earn a total of  1,820  from holding Veidekke ASA or generate 14.82% return on investment over 90 days.

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

Veidekke ASA  vs.  Entra ASA

Veidekke ASA

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Veidekke ASA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward indicators, Veidekke ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Entra ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entra ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Veidekke ASA and Entra ASA

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

The idea behind Veidekke ASA and Entra ASA 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.