Correlation Between Elopak AS and Elkem ASA
Can any of the company-specific risk be diversified away by investing in both Elopak AS and Elkem 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 Elopak AS and Elkem ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elopak AS and Elkem ASA, you can compare the effects of market volatilities on Elopak AS and Elkem 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 Elopak AS with a short position of Elkem ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elopak AS and Elkem ASA.
Diversification Opportunities for Elopak AS and Elkem ASA
Average diversification
The 3 months correlation between Elopak and Elkem is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Elopak AS and Elkem ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elkem ASA and Elopak AS 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 Elopak AS are associated (or correlated) with Elkem ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elkem ASA has no effect on the direction of Elopak AS i.e., Elopak AS and Elkem ASA go up and down completely randomly.
Pair Corralation between Elopak AS and Elkem ASA
Assuming the 90 days trading horizon Elopak AS is expected to generate 0.89 times more return on investment than Elkem ASA. However, Elopak AS is 1.12 times less risky than Elkem ASA. It trades about 0.08 of its potential returns per unit of risk. Elkem ASA is currently generating about -0.03 per unit of risk. If you would invest 2,299 in Elopak AS on September 3, 2024 and sell it today you would earn a total of 2,096 from holding Elopak AS or generate 91.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elopak AS vs. Elkem ASA
Performance |
| Timeline |
| Elopak AS |
| Elkem ASA |
Elopak AS and Elkem ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elopak AS and Elkem ASA
The main advantage of trading using opposite Elopak AS and Elkem ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elopak AS position performs unexpectedly, Elkem 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 Elkem ASA will offset losses from the drop in Elkem ASA's long position.| Elopak AS vs. Elkem ASA | Elopak AS vs. Norske Skog Asa | Elopak AS vs. Kitron ASA | Elopak AS vs. Europris ASA |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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