Correlation Between Elkem ASA and Aurskog Sparebank
Can any of the company-specific risk be diversified away by investing in both Elkem ASA and Aurskog Sparebank 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 Aurskog Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elkem ASA and Aurskog Sparebank, you can compare the effects of market volatilities on Elkem ASA and Aurskog Sparebank 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 Aurskog Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elkem ASA and Aurskog Sparebank.
Diversification Opportunities for Elkem ASA and Aurskog Sparebank
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Elkem and Aurskog is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Elkem ASA and Aurskog Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurskog Sparebank 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 Aurskog Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurskog Sparebank has no effect on the direction of Elkem ASA i.e., Elkem ASA and Aurskog Sparebank go up and down completely randomly.
Pair Corralation between Elkem ASA and Aurskog Sparebank
Assuming the 90 days trading horizon Elkem ASA is expected to generate 1.61 times more return on investment than Aurskog Sparebank. However, Elkem ASA is 1.61 times more volatile than Aurskog Sparebank. It trades about 0.06 of its potential returns per unit of risk. Aurskog Sparebank is currently generating about -0.05 per unit of risk. If you would invest 1,800 in Elkem ASA on September 4, 2024 and sell it today you would earn a total of 37.00 from holding Elkem ASA or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elkem ASA vs. Aurskog Sparebank
Performance |
| Timeline |
| Elkem ASA |
| Aurskog Sparebank |
Elkem ASA and Aurskog Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elkem ASA and Aurskog Sparebank
The main advantage of trading using opposite Elkem ASA and Aurskog Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elkem ASA position performs unexpectedly, Aurskog Sparebank 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 Aurskog Sparebank will offset losses from the drop in Aurskog Sparebank'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 |
| Aurskog Sparebank vs. Melhus Sparebank | Aurskog Sparebank vs. Holand og Setskog | Aurskog Sparebank vs. Helgeland Sparebank |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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