Correlation Between Sparebank and Primary Health
Can any of the company-specific risk be diversified away by investing in both Sparebank and Primary Health 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 Primary Health 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 Primary Health Properties, you can compare the effects of market volatilities on Sparebank and Primary Health 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 Primary Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Primary Health.
Diversification Opportunities for Sparebank and Primary Health
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sparebank and Primary is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SR and Primary Health Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primary Health Properties 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 Primary Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primary Health Properties has no effect on the direction of Sparebank i.e., Sparebank and Primary Health go up and down completely randomly.
Pair Corralation between Sparebank and Primary Health
Assuming the 90 days trading horizon Sparebank 1 SR is expected to generate 0.93 times more return on investment than Primary Health. However, Sparebank 1 SR is 1.07 times less risky than Primary Health. It trades about 0.12 of its potential returns per unit of risk. Primary Health Properties is currently generating about 0.04 per unit of risk. If you would invest 12,066 in Sparebank 1 SR on November 3, 2024 and sell it today you would earn a total of 4,154 from holding Sparebank 1 SR or generate 34.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Sparebank 1 SR vs. Primary Health Properties
Performance |
| Timeline |
| Sparebank 1 SR |
| Primary Health Properties |
Sparebank and Primary Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Primary Health
The main advantage of trading using opposite Sparebank and Primary Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Primary Health 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 Primary Health will offset losses from the drop in Primary Health's long position.| Sparebank vs. Dairy Farm International | Sparebank vs. Capital Metals PLC | Sparebank vs. Westlake Chemical Corp | Sparebank vs. Central Asia Metals |
| Primary Health vs. Golden Metal Resources | Primary Health vs. Adriatic Metals | Primary Health vs. Empire Metals Limited | Primary Health vs. Fulcrum Metals PLC |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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