Correlation Between Elkem ASA and Elliptic Laboratories
Can any of the company-specific risk be diversified away by investing in both Elkem ASA and Elliptic Laboratories 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 Elliptic Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elkem ASA and Elliptic Laboratories AS, you can compare the effects of market volatilities on Elkem ASA and Elliptic Laboratories 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 Elliptic Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elkem ASA and Elliptic Laboratories.
Diversification Opportunities for Elkem ASA and Elliptic Laboratories
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Elkem and Elliptic is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Elkem ASA and Elliptic Laboratories AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elliptic Laboratories 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 Elliptic Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elliptic Laboratories has no effect on the direction of Elkem ASA i.e., Elkem ASA and Elliptic Laboratories go up and down completely randomly.
Pair Corralation between Elkem ASA and Elliptic Laboratories
Assuming the 90 days trading horizon Elkem ASA is expected to generate 0.75 times more return on investment than Elliptic Laboratories. However, Elkem ASA is 1.33 times less risky than Elliptic Laboratories. It trades about -0.1 of its potential returns per unit of risk. Elliptic Laboratories AS is currently generating about -0.23 per unit of risk. 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 |
Elkem ASA vs. Elliptic Laboratories AS
Performance |
| Timeline |
| Elkem ASA |
| Elliptic Laboratories |
Elkem ASA and Elliptic Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elkem ASA and Elliptic Laboratories
The main advantage of trading using opposite Elkem ASA and Elliptic Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elkem ASA position performs unexpectedly, Elliptic Laboratories 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 Elliptic Laboratories will offset losses from the drop in Elliptic Laboratories' long position.| Elkem ASA vs. Goodtech | Elkem ASA vs. Havila Shipping ASA | Elkem ASA vs. Eidesvik Offshore ASA | Elkem ASA vs. Byggma |
| Elliptic Laboratories vs. Elkem ASA | Elliptic Laboratories vs. Vow ASA | Elliptic Laboratories vs. North Energy ASA | Elliptic Laboratories vs. Arcticzymes Technologies 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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