Correlation Between Arendals Fossekompani and Magnora ASA
Can any of the company-specific risk be diversified away by investing in both Arendals Fossekompani and Magnora 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 Arendals Fossekompani and Magnora ASA 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 Magnora ASA, you can compare the effects of market volatilities on Arendals Fossekompani and Magnora 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 Arendals Fossekompani with a short position of Magnora ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arendals Fossekompani and Magnora ASA.
Diversification Opportunities for Arendals Fossekompani and Magnora ASA
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arendals and Magnora is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Arendals Fossekompani ASA and Magnora ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnora ASA 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 Magnora ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnora ASA has no effect on the direction of Arendals Fossekompani i.e., Arendals Fossekompani and Magnora ASA go up and down completely randomly.
Pair Corralation between Arendals Fossekompani and Magnora ASA
Assuming the 90 days trading horizon Arendals Fossekompani ASA is expected to under-perform the Magnora ASA. But the stock apears to be less risky and, when comparing its historical volatility, Arendals Fossekompani ASA is 1.02 times less risky than Magnora ASA. The stock trades about -0.06 of its potential returns per unit of risk. The Magnora ASA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,190 in Magnora ASA on September 3, 2024 and sell it today you would earn a total of 315.00 from holding Magnora ASA or generate 14.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arendals Fossekompani ASA vs. Magnora ASA
Performance |
| Timeline |
| Arendals Fossekompani ASA |
| Magnora ASA |
Arendals Fossekompani and Magnora ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arendals Fossekompani and Magnora ASA
The main advantage of trading using opposite Arendals Fossekompani and Magnora ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arendals Fossekompani position performs unexpectedly, Magnora 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 Magnora ASA will offset losses from the drop in Magnora ASA'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 |
| Magnora ASA vs. Aker Horizons AS | Magnora ASA vs. REC Silicon ASA | Magnora ASA vs. Vow ASA | Magnora ASA vs. Saga Pure 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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