Correlation Between Aega ASA and Instabank ASA
Can any of the company-specific risk be diversified away by investing in both Aega ASA and Instabank 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 Aega ASA and Instabank ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aega ASA and Instabank ASA, you can compare the effects of market volatilities on Aega ASA and Instabank 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 Aega ASA with a short position of Instabank ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aega ASA and Instabank ASA.
Diversification Opportunities for Aega ASA and Instabank ASA
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aega and Instabank is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Aega ASA and Instabank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instabank ASA and Aega 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 Aega ASA are associated (or correlated) with Instabank ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instabank ASA has no effect on the direction of Aega ASA i.e., Aega ASA and Instabank ASA go up and down completely randomly.
Pair Corralation between Aega ASA and Instabank ASA
Assuming the 90 days trading horizon Aega ASA is expected to generate 7.23 times more return on investment than Instabank ASA. However, Aega ASA is 7.23 times more volatile than Instabank ASA. It trades about 0.01 of its potential returns per unit of risk. Instabank ASA is currently generating about 0.03 per unit of risk. If you would invest 285.00 in Aega ASA on September 4, 2024 and sell it today you would lose (264.00) from holding Aega ASA or give up 92.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.58% |
| Values | Daily Returns |
Aega ASA vs. Instabank ASA
Performance |
| Timeline |
| Aega ASA |
| Instabank ASA |
Aega ASA and Instabank ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aega ASA and Instabank ASA
The main advantage of trading using opposite Aega ASA and Instabank ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aega ASA position performs unexpectedly, Instabank 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 Instabank ASA will offset losses from the drop in Instabank ASA's long position.| Aega ASA vs. Norsk Hydro ASA | Aega ASA vs. Sparebank 1 SR | Aega ASA vs. Romsdal Sparebank | Aega ASA vs. Sogn Sparebank |
| Instabank ASA vs. DnB ASA | Instabank ASA vs. Sparebank 1 SR | Instabank ASA vs. Sparebank 1 SMN | Instabank ASA vs. Sparebanken Mre |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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