Correlation Between Bouvet and Elopak AS
Can any of the company-specific risk be diversified away by investing in both Bouvet and Elopak AS 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 Elopak AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bouvet and Elopak AS, you can compare the effects of market volatilities on Bouvet and Elopak AS 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 Elopak AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bouvet and Elopak AS.
Diversification Opportunities for Bouvet and Elopak AS
Excellent diversification
The 3 months correlation between Bouvet and Elopak is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bouvet and Elopak AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elopak AS 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 Elopak AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elopak AS has no effect on the direction of Bouvet i.e., Bouvet and Elopak AS go up and down completely randomly.
Pair Corralation between Bouvet and Elopak AS
Assuming the 90 days trading horizon Bouvet is expected to generate 0.97 times more return on investment than Elopak AS. However, Bouvet is 1.03 times less risky than Elopak AS. It trades about -0.1 of its potential returns per unit of risk. Elopak AS is currently generating about -0.15 per unit of risk. If you would invest 7,650 in Bouvet on November 30, 2024 and sell it today you would lose (550.00) from holding Bouvet or give up 7.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bouvet vs. Elopak AS
Performance |
| Timeline |
| Bouvet |
| Elopak AS |
Bouvet and Elopak AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bouvet and Elopak AS
The main advantage of trading using opposite Bouvet and Elopak AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bouvet position performs unexpectedly, Elopak AS 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 Elopak AS will offset losses from the drop in Elopak AS's long position.The idea behind Bouvet and Elopak AS 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.| Elopak AS vs. Elkem ASA | Elopak AS vs. Norske Skog Asa | Elopak AS vs. Kitron ASA | Elopak AS vs. Europris 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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