Correlation Between Sparebank and Zegona Communications
Can any of the company-specific risk be diversified away by investing in both Sparebank and Zegona Communications 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 Zegona Communications 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 Zegona Communications Plc, you can compare the effects of market volatilities on Sparebank and Zegona Communications 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 Zegona Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Zegona Communications.
Diversification Opportunities for Sparebank and Zegona Communications
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sparebank and Zegona is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SR and Zegona Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zegona Communications Plc 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 Zegona Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zegona Communications Plc has no effect on the direction of Sparebank i.e., Sparebank and Zegona Communications go up and down completely randomly.
Pair Corralation between Sparebank and Zegona Communications
Assuming the 90 days trading horizon Sparebank is expected to generate 2.81 times less return on investment than Zegona Communications. But when comparing it to its historical volatility, Sparebank 1 SR is 1.81 times less risky than Zegona Communications. It trades about 0.05 of its potential returns per unit of risk. Zegona Communications Plc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 30,800 in Zegona Communications Plc on September 13, 2024 and sell it today you would earn a total of 1,200 from holding Zegona Communications Plc or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebank 1 SR vs. Zegona Communications Plc
Performance |
| Timeline |
| Sparebank 1 SR |
| Zegona Communications Plc |
Sparebank and Zegona Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Zegona Communications
The main advantage of trading using opposite Sparebank and Zegona Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Zegona Communications 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 Zegona Communications will offset losses from the drop in Zegona Communications' long position.| Sparebank vs. Porvair plc | Sparebank vs. GreenX Metals | Sparebank vs. Morgan Advanced Materials | Sparebank vs. Metals Exploration Plc |
| Zegona Communications vs. Vulcan Materials Co | Zegona Communications vs. Cairo Communication SpA | Zegona Communications vs. Orient Telecoms | Zegona Communications vs. Morgan Advanced Materials |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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