Correlation Between Byggma and Veidekke ASA
Can any of the company-specific risk be diversified away by investing in both Byggma 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 Byggma and Veidekke ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Byggma and Veidekke ASA, you can compare the effects of market volatilities on Byggma 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 Byggma with a short position of Veidekke ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byggma and Veidekke ASA.
Diversification Opportunities for Byggma and Veidekke ASA
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Byggma and Veidekke is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Byggma and Veidekke ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veidekke ASA 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 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 Byggma i.e., Byggma and Veidekke ASA go up and down completely randomly.
Pair Corralation between Byggma and Veidekke ASA
Assuming the 90 days trading horizon Byggma is expected to under-perform the Veidekke ASA. In addition to that, Byggma is 3.05 times more volatile than Veidekke ASA. It trades about -0.05 of its total potential returns per unit of risk. Veidekke ASA is currently generating about 0.28 per unit of volatility. If you would invest 12,520 in Veidekke ASA on September 1, 2024 and sell it today you would earn a total of 1,140 from holding Veidekke ASA or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Byggma vs. Veidekke ASA
Performance |
| Timeline |
| Byggma |
| Veidekke ASA |
Byggma and Veidekke ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byggma and Veidekke ASA
The main advantage of trading using opposite Byggma and Veidekke ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byggma 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.| Byggma vs. AF Gruppen ASA | Byggma vs. American Shipping | Byggma vs. Arendals Fossekompani ASA | Byggma vs. Kid 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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