Correlation Between Magnora ASA and Baker Steel
Can any of the company-specific risk be diversified away by investing in both Magnora ASA and Baker Steel 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 Magnora ASA and Baker Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnora ASA and Baker Steel Resources, you can compare the effects of market volatilities on Magnora ASA and Baker Steel 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 Magnora ASA with a short position of Baker Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnora ASA and Baker Steel.
Diversification Opportunities for Magnora ASA and Baker Steel
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magnora and Baker is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Magnora ASA and Baker Steel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Steel Resources and Magnora 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 Magnora ASA are associated (or correlated) with Baker Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Steel Resources has no effect on the direction of Magnora ASA i.e., Magnora ASA and Baker Steel go up and down completely randomly.
Pair Corralation between Magnora ASA and Baker Steel
Assuming the 90 days trading horizon Magnora ASA is expected to generate 2.36 times less return on investment than Baker Steel. In addition to that, Magnora ASA is 1.13 times more volatile than Baker Steel Resources. It trades about 0.02 of its total potential returns per unit of risk. Baker Steel Resources is currently generating about 0.06 per unit of volatility. If you would invest 3,450 in Baker Steel Resources on September 14, 2024 and sell it today you would earn a total of 2,350 from holding Baker Steel Resources or generate 68.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnora ASA vs. Baker Steel Resources
Performance |
| Timeline |
| Magnora ASA |
| Baker Steel Resources |
Magnora ASA and Baker Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnora ASA and Baker Steel
The main advantage of trading using opposite Magnora ASA and Baker Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnora ASA position performs unexpectedly, Baker Steel 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 Baker Steel will offset losses from the drop in Baker Steel's long position.| Magnora ASA vs. Aurora Investment Trust | Magnora ASA vs. Fevertree Drinks Plc | Magnora ASA vs. Monster Beverage Corp | Magnora ASA vs. Hansa Investment |
| Baker Steel vs. Catalyst Media Group | Baker Steel vs. CATLIN GROUP | Baker Steel vs. Tamburi Investment Partners | Baker Steel vs. Magnora ASA |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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