Correlation Between AF Gruppen and Arendals Fossekompani
Can any of the company-specific risk be diversified away by investing in both AF Gruppen and Arendals Fossekompani 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 AF Gruppen and Arendals Fossekompani into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AF Gruppen ASA and Arendals Fossekompani ASA, you can compare the effects of market volatilities on AF Gruppen and Arendals Fossekompani 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 AF Gruppen with a short position of Arendals Fossekompani. Check out your portfolio center. Please also check ongoing floating volatility patterns of AF Gruppen and Arendals Fossekompani.
Diversification Opportunities for AF Gruppen and Arendals Fossekompani
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AFG and Arendals is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding AF Gruppen ASA and Arendals Fossekompani ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arendals Fossekompani ASA and AF Gruppen 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 AF Gruppen ASA are associated (or correlated) with Arendals Fossekompani. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arendals Fossekompani ASA has no effect on the direction of AF Gruppen i.e., AF Gruppen and Arendals Fossekompani go up and down completely randomly.
Pair Corralation between AF Gruppen and Arendals Fossekompani
Assuming the 90 days trading horizon AF Gruppen ASA is expected to generate 0.76 times more return on investment than Arendals Fossekompani. However, AF Gruppen ASA is 1.32 times less risky than Arendals Fossekompani. It trades about 0.05 of its potential returns per unit of risk. Arendals Fossekompani ASA is currently generating about -0.01 per unit of risk. If you would invest 12,099 in AF Gruppen ASA on August 25, 2024 and sell it today you would earn a total of 1,701 from holding AF Gruppen ASA or generate 14.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AF Gruppen ASA vs. Arendals Fossekompani ASA
Performance |
| Timeline |
| AF Gruppen ASA |
| Arendals Fossekompani ASA |
AF Gruppen and Arendals Fossekompani Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AF Gruppen and Arendals Fossekompani
The main advantage of trading using opposite AF Gruppen and Arendals Fossekompani positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AF Gruppen position performs unexpectedly, Arendals Fossekompani 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 Arendals Fossekompani will offset losses from the drop in Arendals Fossekompani's long position.| AF Gruppen vs. Veidekke ASA | AF Gruppen vs. Gjensidige Forsikring ASA | AF Gruppen vs. Orkla ASA | AF Gruppen vs. Kongsberg Gruppen ASA |
| Arendals Fossekompani vs. AF Gruppen ASA | Arendals Fossekompani vs. Aker ASA | Arendals Fossekompani vs. Kitron ASA | Arendals Fossekompani vs. Kongsberg Gruppen 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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