Correlation Between Arendals Fossekompani and Veidekke ASA
Can any of the company-specific risk be diversified away by investing in both Arendals Fossekompani and Veidekke 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 Veidekke 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 Veidekke ASA, you can compare the effects of market volatilities on Arendals Fossekompani and Veidekke 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 Veidekke ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arendals Fossekompani and Veidekke ASA.
Diversification Opportunities for Arendals Fossekompani and Veidekke ASA
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Arendals and Veidekke is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Arendals Fossekompani ASA and Veidekke ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veidekke 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 Veidekke ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veidekke ASA has no effect on the direction of Arendals Fossekompani i.e., Arendals Fossekompani and Veidekke ASA go up and down completely randomly.
Pair Corralation between Arendals Fossekompani and Veidekke ASA
Assuming the 90 days trading horizon Arendals Fossekompani is expected to generate 2.94 times less return on investment than Veidekke ASA. In addition to that, Arendals Fossekompani is 1.72 times more volatile than Veidekke ASA. It trades about 0.03 of its total potential returns per unit of risk. Veidekke ASA is currently generating about 0.17 per unit of volatility. If you would invest 13,740 in Veidekke ASA on October 7, 2024 and sell it today you would earn a total of 360.00 from holding Veidekke ASA or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arendals Fossekompani ASA vs. Veidekke ASA
Performance |
| Timeline |
| Arendals Fossekompani ASA |
| Veidekke ASA |
Arendals Fossekompani and Veidekke ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arendals Fossekompani and Veidekke ASA
The main advantage of trading using opposite Arendals Fossekompani and Veidekke ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arendals Fossekompani position performs unexpectedly, Veidekke 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 Veidekke ASA will offset losses from the drop in Veidekke 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 |
| Veidekke ASA vs. AF Gruppen ASA | Veidekke ASA vs. Gjensidige Forsikring ASA | Veidekke ASA vs. Storebrand ASA | Veidekke ASA vs. Orkla 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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