Correlation Between Baltic Sea and Entra ASA
Can any of the company-specific risk be diversified away by investing in both Baltic Sea and Entra 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 Baltic Sea and Entra ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baltic Sea Properties and Entra ASA, you can compare the effects of market volatilities on Baltic Sea and Entra 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 Baltic Sea with a short position of Entra ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baltic Sea and Entra ASA.
Diversification Opportunities for Baltic Sea and Entra ASA
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Baltic and Entra is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Baltic Sea Properties and Entra ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entra ASA and Baltic Sea 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 Baltic Sea Properties are associated (or correlated) with Entra ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entra ASA has no effect on the direction of Baltic Sea i.e., Baltic Sea and Entra ASA go up and down completely randomly.
Pair Corralation between Baltic Sea and Entra ASA
Assuming the 90 days trading horizon Baltic Sea is expected to generate 1.07 times less return on investment than Entra ASA. In addition to that, Baltic Sea is 2.33 times more volatile than Entra ASA. It trades about 0.04 of its total potential returns per unit of risk. Entra ASA is currently generating about 0.1 per unit of volatility. If you would invest 11,700 in Entra ASA on September 3, 2024 and sell it today you would earn a total of 440.00 from holding Entra ASA or generate 3.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baltic Sea Properties vs. Entra ASA
Performance |
| Timeline |
| Baltic Sea Properties |
| Entra ASA |
Baltic Sea and Entra ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baltic Sea and Entra ASA
The main advantage of trading using opposite Baltic Sea and Entra ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baltic Sea position performs unexpectedly, Entra 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 Entra ASA will offset losses from the drop in Entra ASA's long position.The idea behind Baltic Sea Properties and Entra 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.| Entra ASA vs. Gjensidige Forsikring ASA | Entra ASA vs. Storebrand ASA | Entra ASA vs. Olav Thon Eien | Entra ASA vs. DnB 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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