Correlation Between Arendals Fossekompani and Byggma
Can any of the company-specific risk be diversified away by investing in both Arendals Fossekompani and Byggma 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 Arendals Fossekompani and Byggma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arendals Fossekompani ASA and Byggma, you can compare the effects of market volatilities on Arendals Fossekompani and Byggma 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 Arendals Fossekompani with a short position of Byggma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arendals Fossekompani and Byggma.
Diversification Opportunities for Arendals Fossekompani and Byggma
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arendals and Byggma is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Arendals Fossekompani ASA and Byggma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byggma and Arendals Fossekompani 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 Arendals Fossekompani ASA are associated (or correlated) with Byggma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byggma has no effect on the direction of Arendals Fossekompani i.e., Arendals Fossekompani and Byggma go up and down completely randomly.
Pair Corralation between Arendals Fossekompani and Byggma
Assuming the 90 days trading horizon Arendals Fossekompani ASA is expected to generate 0.79 times more return on investment than Byggma. However, Arendals Fossekompani ASA is 1.27 times less risky than Byggma. It trades about 0.01 of its potential returns per unit of risk. Byggma is currently generating about -0.04 per unit of risk. If you would invest 14,578 in Arendals Fossekompani ASA on August 25, 2024 and sell it today you would earn a total of 42.00 from holding Arendals Fossekompani ASA or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arendals Fossekompani ASA vs. Byggma
Performance |
| Timeline |
| Arendals Fossekompani ASA |
| Byggma |
Arendals Fossekompani and Byggma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arendals Fossekompani and Byggma
The main advantage of trading using opposite Arendals Fossekompani and Byggma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arendals Fossekompani position performs unexpectedly, Byggma 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 Byggma will offset losses from the drop in Byggma's long position.| Arendals Fossekompani vs. AF Gruppen ASA | Arendals Fossekompani vs. Aker ASA | Arendals Fossekompani vs. Kitron ASA | Arendals Fossekompani vs. Kongsberg Gruppen ASA |
| Byggma vs. AF Gruppen ASA | Byggma vs. American Shipping | Byggma vs. Arendals Fossekompani ASA | Byggma vs. Kid 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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