Correlation Between ABG Sundal and Schibsted ASA
Can any of the company-specific risk be diversified away by investing in both ABG Sundal and Schibsted 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 ABG Sundal and Schibsted ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABG Sundal Collier and Schibsted ASA B, you can compare the effects of market volatilities on ABG Sundal and Schibsted 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 ABG Sundal with a short position of Schibsted ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABG Sundal and Schibsted ASA.
Diversification Opportunities for ABG Sundal and Schibsted ASA
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ABG and Schibsted is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding ABG Sundal Collier and Schibsted ASA B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schibsted ASA B and ABG Sundal 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 ABG Sundal Collier are associated (or correlated) with Schibsted ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schibsted ASA B has no effect on the direction of ABG Sundal i.e., ABG Sundal and Schibsted ASA go up and down completely randomly.
Pair Corralation between ABG Sundal and Schibsted ASA
Assuming the 90 days trading horizon ABG Sundal is expected to generate 1.94 times less return on investment than Schibsted ASA. But when comparing it to its historical volatility, ABG Sundal Collier is 1.37 times less risky than Schibsted ASA. It trades about 0.09 of its potential returns per unit of risk. Schibsted ASA B is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 19,011 in Schibsted ASA B on August 25, 2024 and sell it today you would earn a total of 15,289 from holding Schibsted ASA B or generate 80.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABG Sundal Collier vs. Schibsted ASA B
Performance |
| Timeline |
| ABG Sundal Collier |
| Schibsted ASA B |
ABG Sundal and Schibsted ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABG Sundal and Schibsted ASA
The main advantage of trading using opposite ABG Sundal and Schibsted ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABG Sundal position performs unexpectedly, Schibsted 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 Schibsted ASA will offset losses from the drop in Schibsted ASA's long position.| ABG Sundal vs. Kid ASA | ABG Sundal vs. Selvaag Bolig ASA | ABG Sundal vs. Elkem ASA | ABG Sundal vs. Europris ASA |
| Schibsted ASA vs. Kid ASA | Schibsted ASA vs. Kitron ASA | Schibsted ASA vs. Olav Thon Eien | Schibsted ASA vs. Elkem 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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