Correlation Between Bouvet and Atea ASA
Can any of the company-specific risk be diversified away by investing in both Bouvet and Atea 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 Bouvet and Atea ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bouvet and Atea ASA, you can compare the effects of market volatilities on Bouvet and Atea 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 Bouvet with a short position of Atea ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bouvet and Atea ASA.
Diversification Opportunities for Bouvet and Atea ASA
Good diversification
The 3 months correlation between Bouvet and Atea is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bouvet and Atea ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atea ASA and Bouvet 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 Bouvet are associated (or correlated) with Atea ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atea ASA has no effect on the direction of Bouvet i.e., Bouvet and Atea ASA go up and down completely randomly.
Pair Corralation between Bouvet and Atea ASA
Assuming the 90 days trading horizon Bouvet is expected to generate 0.99 times more return on investment than Atea ASA. However, Bouvet is 1.01 times less risky than Atea ASA. It trades about 0.18 of its potential returns per unit of risk. Atea ASA is currently generating about -0.05 per unit of risk. If you would invest 6,835 in Bouvet on September 4, 2024 and sell it today you would earn a total of 345.00 from holding Bouvet or generate 5.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bouvet vs. Atea ASA
Performance |
| Timeline |
| Bouvet |
| Atea ASA |
Bouvet and Atea ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bouvet and Atea ASA
The main advantage of trading using opposite Bouvet and Atea ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bouvet position performs unexpectedly, Atea 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 Atea ASA will offset losses from the drop in Atea ASA's long position.The idea behind Bouvet and Atea 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.| Atea ASA vs. Gjensidige Forsikring ASA | Atea ASA vs. Veidekke ASA | Atea ASA vs. Orkla ASA | Atea ASA vs. Aker 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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