Correlation Between Elkem ASA and Nordic Aqua
Can any of the company-specific risk be diversified away by investing in both Elkem ASA and Nordic Aqua 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 Nordic Aqua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elkem ASA and Nordic Aqua Partners, you can compare the effects of market volatilities on Elkem ASA and Nordic Aqua 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 Nordic Aqua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elkem ASA and Nordic Aqua.
Diversification Opportunities for Elkem ASA and Nordic Aqua
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Elkem and Nordic is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Elkem ASA and Nordic Aqua Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Aqua Partners 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 Nordic Aqua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Aqua Partners has no effect on the direction of Elkem ASA i.e., Elkem ASA and Nordic Aqua go up and down completely randomly.
Pair Corralation between Elkem ASA and Nordic Aqua
Assuming the 90 days trading horizon Elkem ASA is expected to generate 0.92 times more return on investment than Nordic Aqua. However, Elkem ASA is 1.08 times less risky than Nordic Aqua. It trades about 0.04 of its potential returns per unit of risk. Nordic Aqua Partners is currently generating about -0.1 per unit of risk. If you would invest 1,800 in Elkem ASA on September 3, 2024 and sell it today you would earn a total of 21.00 from holding Elkem ASA or generate 1.17% 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. Nordic Aqua Partners
Performance |
| Timeline |
| Elkem ASA |
| Nordic Aqua Partners |
Elkem ASA and Nordic Aqua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elkem ASA and Nordic Aqua
The main advantage of trading using opposite Elkem ASA and Nordic Aqua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elkem ASA position performs unexpectedly, Nordic Aqua 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 Nordic Aqua will offset losses from the drop in Nordic Aqua'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 |
| Nordic Aqua vs. SalMar ASA | Nordic Aqua vs. Austevoll Seafood ASA | Nordic Aqua vs. Icelandic Salmon As | Nordic Aqua vs. Masoval AS |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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