Correlation Between Elliptic Laboratories and Elkem ASA
Can any of the company-specific risk be diversified away by investing in both Elliptic Laboratories and Elkem 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 Elliptic Laboratories and Elkem ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elliptic Laboratories AS and Elkem ASA, you can compare the effects of market volatilities on Elliptic Laboratories and Elkem 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 Elliptic Laboratories with a short position of Elkem ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elliptic Laboratories and Elkem ASA.
Diversification Opportunities for Elliptic Laboratories and Elkem ASA
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Elliptic and Elkem is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Elliptic Laboratories AS and Elkem ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elkem ASA and Elliptic Laboratories 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 Elliptic Laboratories AS are associated (or correlated) with Elkem ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elkem ASA has no effect on the direction of Elliptic Laboratories i.e., Elliptic Laboratories and Elkem ASA go up and down completely randomly.
Pair Corralation between Elliptic Laboratories and Elkem ASA
Assuming the 90 days trading horizon Elliptic Laboratories AS is expected to under-perform the Elkem ASA. In addition to that, Elliptic Laboratories is 1.33 times more volatile than Elkem ASA. It trades about -0.23 of its total potential returns per unit of risk. Elkem ASA is currently generating about -0.1 per unit of volatility. If you would invest 1,983 in Elkem ASA on August 28, 2024 and sell it today you would lose (175.00) from holding Elkem ASA or give up 8.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elliptic Laboratories AS vs. Elkem ASA
Performance |
| Timeline |
| Elliptic Laboratories |
| Elkem ASA |
Elliptic Laboratories and Elkem ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elliptic Laboratories and Elkem ASA
The main advantage of trading using opposite Elliptic Laboratories and Elkem ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elliptic Laboratories position performs unexpectedly, Elkem 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 Elkem ASA will offset losses from the drop in Elkem ASA's long position.| Elliptic Laboratories vs. Elkem ASA | Elliptic Laboratories vs. Vow ASA | Elliptic Laboratories vs. North Energy ASA | Elliptic Laboratories vs. Arcticzymes Technologies ASA |
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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