Correlation Between Elkem ASA and Masoval AS
Can any of the company-specific risk be diversified away by investing in both Elkem ASA and Masoval AS 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 Masoval AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elkem ASA and Masoval AS, you can compare the effects of market volatilities on Elkem ASA and Masoval AS 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 Masoval AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elkem ASA and Masoval AS.
Diversification Opportunities for Elkem ASA and Masoval AS
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Elkem and Masoval is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Elkem ASA and Masoval AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masoval AS 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 Masoval AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masoval AS has no effect on the direction of Elkem ASA i.e., Elkem ASA and Masoval AS go up and down completely randomly.
Pair Corralation between Elkem ASA and Masoval AS
Assuming the 90 days trading horizon Elkem ASA is expected to generate 1.12 times less return on investment than Masoval AS. But when comparing it to its historical volatility, Elkem ASA is 1.38 times less risky than Masoval AS. It trades about 0.05 of its potential returns per unit of risk. Masoval AS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,740 in Masoval AS on September 1, 2024 and sell it today you would earn a total of 40.00 from holding Masoval AS or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elkem ASA vs. Masoval AS
Performance |
| Timeline |
| Elkem ASA |
| Masoval AS |
Elkem ASA and Masoval AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elkem ASA and Masoval AS
The main advantage of trading using opposite Elkem ASA and Masoval AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elkem ASA position performs unexpectedly, Masoval AS 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 Masoval AS will offset losses from the drop in Masoval AS'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 |
| Masoval AS vs. Andfjord Salmon AS | Masoval AS vs. Elkem ASA | Masoval AS vs. Integrated Wind Solutions | Masoval AS vs. Vow 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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