Correlation Between AF Gruppen and EAM Solar
Can any of the company-specific risk be diversified away by investing in both AF Gruppen and EAM Solar 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 EAM Solar 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 EAM Solar ASA, you can compare the effects of market volatilities on AF Gruppen and EAM Solar 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 EAM Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of AF Gruppen and EAM Solar.
Diversification Opportunities for AF Gruppen and EAM Solar
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AFG and EAM is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding AF Gruppen ASA and EAM Solar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAM Solar 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 EAM Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAM Solar ASA has no effect on the direction of AF Gruppen i.e., AF Gruppen and EAM Solar go up and down completely randomly.
Pair Corralation between AF Gruppen and EAM Solar
Assuming the 90 days trading horizon AF Gruppen ASA is expected to generate 0.22 times more return on investment than EAM Solar. However, AF Gruppen ASA is 4.58 times less risky than EAM Solar. It trades about 0.35 of its potential returns per unit of risk. EAM Solar ASA is currently generating about -0.16 per unit of risk. If you would invest 13,580 in AF Gruppen ASA on September 15, 2024 and sell it today you would earn a total of 1,240 from holding AF Gruppen ASA or generate 9.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
AF Gruppen ASA vs. EAM Solar ASA
Performance |
| Timeline |
| AF Gruppen ASA |
| EAM Solar ASA |
AF Gruppen and EAM Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AF Gruppen and EAM Solar
The main advantage of trading using opposite AF Gruppen and EAM Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AF Gruppen position performs unexpectedly, EAM Solar 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 EAM Solar will offset losses from the drop in EAM Solar'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 |
| EAM Solar vs. AF Gruppen ASA | EAM Solar vs. Aker ASA | EAM Solar vs. Kitron ASA | EAM Solar 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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