Correlation Between Elkem ASA and Tomra Systems
Can any of the company-specific risk be diversified away by investing in both Elkem ASA and Tomra Systems 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 Tomra Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elkem ASA and Tomra Systems ASA, you can compare the effects of market volatilities on Elkem ASA and Tomra Systems 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 Tomra Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elkem ASA and Tomra Systems.
Diversification Opportunities for Elkem ASA and Tomra Systems
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Elkem and Tomra is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Elkem ASA and Tomra Systems ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tomra Systems 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 Tomra Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tomra Systems ASA has no effect on the direction of Elkem ASA i.e., Elkem ASA and Tomra Systems go up and down completely randomly.
Pair Corralation between Elkem ASA and Tomra Systems
Assuming the 90 days trading horizon Elkem ASA is expected to generate 0.77 times more return on investment than Tomra Systems. However, Elkem ASA is 1.3 times less risky than Tomra Systems. It trades about -0.11 of its potential returns per unit of risk. Tomra Systems ASA is currently generating about -0.19 per unit of risk. If you would invest 1,903 in Elkem ASA on August 25, 2024 and sell it today you would lose (81.00) from holding Elkem ASA or give up 4.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elkem ASA vs. Tomra Systems ASA
Performance |
| Timeline |
| Elkem ASA |
| Tomra Systems ASA |
Elkem ASA and Tomra Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elkem ASA and Tomra Systems
The main advantage of trading using opposite Elkem ASA and Tomra Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elkem ASA position performs unexpectedly, Tomra Systems 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 Tomra Systems will offset losses from the drop in Tomra Systems' long position.| Elkem ASA vs. Storebrand ASA | Elkem ASA vs. Yara International ASA | Elkem ASA vs. Lery Seafood Group | Elkem ASA vs. DnB ASA |
| Tomra Systems vs. Eidesvik Offshore ASA | Tomra Systems vs. Kitron ASA | Tomra Systems vs. Havila Shipping ASA | Tomra Systems vs. Elkem 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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