Correlation Between Bouvet and Hermana Holding
Can any of the company-specific risk be diversified away by investing in both Bouvet and Hermana Holding 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 Hermana Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bouvet and Hermana Holding ASA, you can compare the effects of market volatilities on Bouvet and Hermana Holding 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 Hermana Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bouvet and Hermana Holding.
Diversification Opportunities for Bouvet and Hermana Holding
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bouvet and Hermana is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bouvet and Hermana Holding ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hermana Holding 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 Hermana Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hermana Holding ASA has no effect on the direction of Bouvet i.e., Bouvet and Hermana Holding go up and down completely randomly.
Pair Corralation between Bouvet and Hermana Holding
Assuming the 90 days trading horizon Bouvet is expected to generate 0.63 times more return on investment than Hermana Holding. However, Bouvet is 1.58 times less risky than Hermana Holding. It trades about 0.27 of its potential returns per unit of risk. Hermana Holding ASA is currently generating about 0.14 per unit of risk. If you would invest 7,500 in Bouvet on October 20, 2024 and sell it today you would earn a total of 470.00 from holding Bouvet or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Bouvet vs. Hermana Holding ASA
Performance |
| Timeline |
| Bouvet |
| Hermana Holding ASA |
Bouvet and Hermana Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bouvet and Hermana Holding
The main advantage of trading using opposite Bouvet and Hermana Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bouvet position performs unexpectedly, Hermana Holding 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 Hermana Holding will offset losses from the drop in Hermana Holding's long position.| Bouvet vs. Huddlestock Fintech As | Bouvet vs. Xplora Technologies As | Bouvet vs. Polight ASA | Bouvet vs. Elkem ASA |
| Hermana Holding vs. Equinor ASA | Hermana Holding vs. DnB ASA | Hermana Holding vs. Aker BP ASA | Hermana Holding vs. Telenor 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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