Correlation Between Sparebank and Datagroup
Can any of the company-specific risk be diversified away by investing in both Sparebank and Datagroup 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 Sparebank and Datagroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebank 1 SR and Datagroup SE, you can compare the effects of market volatilities on Sparebank and Datagroup 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 Sparebank with a short position of Datagroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Datagroup.
Diversification Opportunities for Sparebank and Datagroup
Weak diversification
The 3 months correlation between Sparebank and Datagroup is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SR and Datagroup SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datagroup SE and Sparebank 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 Sparebank 1 SR are associated (or correlated) with Datagroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datagroup SE has no effect on the direction of Sparebank i.e., Sparebank and Datagroup go up and down completely randomly.
Pair Corralation between Sparebank and Datagroup
Assuming the 90 days trading horizon Sparebank is expected to generate 5.03 times less return on investment than Datagroup. But when comparing it to its historical volatility, Sparebank 1 SR is 2.29 times less risky than Datagroup. It trades about 0.17 of its potential returns per unit of risk. Datagroup SE is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 3,840 in Datagroup SE on September 15, 2024 and sell it today you would earn a total of 1,050 from holding Datagroup SE or generate 27.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebank 1 SR vs. Datagroup SE
Performance |
| Timeline |
| Sparebank 1 SR |
| Datagroup SE |
Sparebank and Datagroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Datagroup
The main advantage of trading using opposite Sparebank and Datagroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Datagroup 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 Datagroup will offset losses from the drop in Datagroup's long position.| Sparebank vs. Samsung Electronics Co | Sparebank vs. Samsung Electronics Co | Sparebank vs. Hyundai Motor | Sparebank vs. Reliance Industries Ltd |
| Datagroup vs. Samsung Electronics Co | Datagroup vs. Samsung Electronics Co | Datagroup vs. Hyundai Motor | Datagroup vs. Reliance Industries Ltd |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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