Correlation Between Elkem ASA and Axactor SE
Can any of the company-specific risk be diversified away by investing in both Elkem ASA and Axactor SE 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 Elkem ASA and Axactor SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elkem ASA and Axactor SE, you can compare the effects of market volatilities on Elkem ASA and Axactor SE 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 Elkem ASA with a short position of Axactor SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elkem ASA and Axactor SE.
Diversification Opportunities for Elkem ASA and Axactor SE
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Elkem and Axactor is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Elkem ASA and Axactor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axactor SE and Elkem ASA 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 Elkem ASA are associated (or correlated) with Axactor SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axactor SE has no effect on the direction of Elkem ASA i.e., Elkem ASA and Axactor SE go up and down completely randomly.
Pair Corralation between Elkem ASA and Axactor SE
Assuming the 90 days trading horizon Elkem ASA is expected to generate 0.9 times more return on investment than Axactor SE. However, Elkem ASA is 1.11 times less risky than Axactor SE. It trades about -0.03 of its potential returns per unit of risk. Axactor SE is currently generating about -0.16 per unit of risk. If you would invest 1,940 in Elkem ASA on September 2, 2024 and sell it today you would lose (119.00) from holding Elkem ASA or give up 6.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elkem ASA vs. Axactor SE
Performance |
| Timeline |
| Elkem ASA |
| Axactor SE |
Elkem ASA and Axactor SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elkem ASA and Axactor SE
The main advantage of trading using opposite Elkem ASA and Axactor SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elkem ASA position performs unexpectedly, Axactor SE 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 Axactor SE will offset losses from the drop in Axactor SE's long position.| Elkem ASA vs. Storebrand ASA | Elkem ASA vs. Yara International ASA | Elkem ASA vs. Lery Seafood Group | Elkem ASA vs. DnB ASA |
| Axactor SE vs. Storebrand ASA | Axactor SE vs. Aker BP ASA | Axactor SE vs. MPC Container Ships | Axactor SE vs. Norske Skog 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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