Correlation Between Arribatec Solutions and Itera ASA

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Can any of the company-specific risk be diversified away by investing in both Arribatec Solutions and Itera 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 Arribatec Solutions and Itera ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arribatec Solutions ASA and Itera ASA, you can compare the effects of market volatilities on Arribatec Solutions and Itera 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 Arribatec Solutions with a short position of Itera ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arribatec Solutions and Itera ASA.

Diversification Opportunities for Arribatec Solutions and Itera ASA

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Arribatec and Itera is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Arribatec Solutions ASA and Itera ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itera ASA and Arribatec Solutions 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 Arribatec Solutions ASA are associated (or correlated) with Itera ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itera ASA has no effect on the direction of Arribatec Solutions i.e., Arribatec Solutions and Itera ASA go up and down completely randomly.

Pair Corralation between Arribatec Solutions and Itera ASA

Assuming the 90 days trading horizon Arribatec Solutions ASA is expected to under-perform the Itera ASA. In addition to that, Arribatec Solutions is 2.42 times more volatile than Itera ASA. It trades about -0.26 of its total potential returns per unit of risk. Itera ASA is currently generating about -0.02 per unit of volatility. If you would invest  908.00  in Itera ASA on October 23, 2024 and sell it today you would lose (8.00) from holding Itera ASA or give up 0.88% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Arribatec Solutions ASA  vs.  Itera ASA

 Performance 
       Timeline  
Arribatec Solutions ASA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Arribatec Solutions ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Itera ASA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Itera ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Arribatec Solutions and Itera ASA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Arribatec Solutions and Itera ASA

The main advantage of trading using opposite Arribatec Solutions and Itera ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arribatec Solutions position performs unexpectedly, Itera 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 Itera ASA will offset losses from the drop in Itera ASA's long position.
The idea behind Arribatec Solutions ASA and Itera ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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