Correlation Between Elkem ASA and Techstep ASA
Can any of the company-specific risk be diversified away by investing in both Elkem ASA and Techstep ASA 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 Techstep ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elkem ASA and Techstep ASA, you can compare the effects of market volatilities on Elkem ASA and Techstep ASA 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 Techstep ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elkem ASA and Techstep ASA.
Diversification Opportunities for Elkem ASA and Techstep ASA
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Elkem and Techstep is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Elkem ASA and Techstep ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techstep ASA 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 Techstep ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techstep ASA has no effect on the direction of Elkem ASA i.e., Elkem ASA and Techstep ASA go up and down completely randomly.
Pair Corralation between Elkem ASA and Techstep ASA
Assuming the 90 days trading horizon Elkem ASA is expected to generate 0.56 times more return on investment than Techstep ASA. However, Elkem ASA is 1.78 times less risky than Techstep ASA. It trades about 0.05 of its potential returns per unit of risk. Techstep ASA is currently generating about 0.01 per unit of risk. If you would invest 1,794 in Elkem ASA on September 1, 2024 and sell it today you would earn a total of 27.00 from holding Elkem ASA or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Elkem ASA vs. Techstep ASA
Performance |
| Timeline |
| Elkem ASA |
| Techstep ASA |
Elkem ASA and Techstep ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elkem ASA and Techstep ASA
The main advantage of trading using opposite Elkem ASA and Techstep ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elkem ASA position performs unexpectedly, Techstep ASA 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 Techstep ASA will offset losses from the drop in Techstep ASA'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 |
| Techstep ASA vs. Next Biometrics Group | Techstep ASA vs. Zalaris ASA | Techstep ASA vs. NRC Group ASA | Techstep ASA vs. Goodtech |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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