Correlation Between Byggma and Olav Thon
Can any of the company-specific risk be diversified away by investing in both Byggma and Olav Thon 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 Byggma and Olav Thon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Byggma and Olav Thon Eien, you can compare the effects of market volatilities on Byggma and Olav Thon 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 Byggma with a short position of Olav Thon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byggma and Olav Thon.
Diversification Opportunities for Byggma and Olav Thon
Poor diversification
The 3 months correlation between Byggma and Olav is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Byggma and Olav Thon Eien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olav Thon Eien and Byggma 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 Byggma are associated (or correlated) with Olav Thon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olav Thon Eien has no effect on the direction of Byggma i.e., Byggma and Olav Thon go up and down completely randomly.
Pair Corralation between Byggma and Olav Thon
Assuming the 90 days trading horizon Byggma is expected to under-perform the Olav Thon. In addition to that, Byggma is 2.76 times more volatile than Olav Thon Eien. It trades about -0.06 of its total potential returns per unit of risk. Olav Thon Eien is currently generating about -0.01 per unit of volatility. If you would invest 22,300 in Olav Thon Eien on August 29, 2024 and sell it today you would lose (500.00) from holding Olav Thon Eien or give up 2.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Byggma vs. Olav Thon Eien
Performance |
| Timeline |
| Byggma |
| Olav Thon Eien |
Byggma and Olav Thon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byggma and Olav Thon
The main advantage of trading using opposite Byggma and Olav Thon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byggma position performs unexpectedly, Olav Thon 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 Olav Thon will offset losses from the drop in Olav Thon's long position.| Byggma vs. AF Gruppen ASA | Byggma vs. American Shipping | Byggma vs. Arendals Fossekompani ASA | Byggma vs. Kid ASA |
| Olav Thon vs. Entra ASA | Olav Thon vs. Veidekke ASA | Olav Thon vs. Selvaag Bolig ASA | Olav Thon vs. Storebrand 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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