Correlation Between Vow Green and Techstep ASA

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

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

Diversification Opportunities for Vow Green and Techstep ASA

0.0

Correlation Coefficient

Vow Green  Techstep ASA

Pay attention - limited upside

The 3 months correlation between Vow and Techstep is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vow Green Metals and Techstep ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techstep ASA and Vow Green 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 Vow Green Metals are associated (or correlated) with Techstep ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techstep ASA has no effect on the direction of Vow Green i.e., Vow Green and Techstep ASA go up and down completely randomly.

Pair Corralation between Vow Green and Techstep ASA

Assuming the 90 days trading horizon Vow Green Metals is expected to generate 1.55 times more return on investment than Techstep ASA. However, Vow Green is 1.55 times more volatile than Techstep ASA. It trades about 0.15 of its potential returns per unit of risk. Techstep ASA is currently generating about 0.08 per unit of risk. If you would invest  62.00  in Vow Green Metals on September 20, 2024 and sell it today you would earn a total of  8.00  from holding Vow Green Metals or generate 12.9% return on investment over 90 days.

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

Vow Green Metals  vs.  Techstep ASA

Vow Green Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vow Green Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting primary indicators, Vow Green may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Techstep ASA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Techstep ASA are ranked lower than 5 (%) 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.

Pair Trading with Vow Green and Techstep ASA

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

The idea behind Vow Green Metals and Techstep 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.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.