Correlation Between Elopak AS and SmartCraft ASA
Can any of the company-specific risk be diversified away by investing in both Elopak AS and SmartCraft 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 SmartCraft 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 SmartCraft ASA, you can compare the effects of market volatilities on Elopak AS and SmartCraft 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 SmartCraft ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elopak AS and SmartCraft ASA.
Diversification Opportunities for Elopak AS and SmartCraft ASA
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Elopak and SmartCraft is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Elopak AS and SmartCraft ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartCraft 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 SmartCraft ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartCraft ASA has no effect on the direction of Elopak AS i.e., Elopak AS and SmartCraft ASA go up and down completely randomly.
Pair Corralation between Elopak AS and SmartCraft ASA
Assuming the 90 days trading horizon Elopak AS is expected to generate 0.38 times more return on investment than SmartCraft ASA. However, Elopak AS is 2.62 times less risky than SmartCraft ASA. It trades about -0.04 of its potential returns per unit of risk. SmartCraft ASA is currently generating about -0.06 per unit of risk. If you would invest 4,455 in Elopak AS on September 1, 2024 and sell it today you would lose (60.00) from holding Elopak AS or give up 1.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elopak AS vs. SmartCraft ASA
Performance |
| Timeline |
| Elopak AS |
| SmartCraft ASA |
Elopak AS and SmartCraft ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elopak AS and SmartCraft ASA
The main advantage of trading using opposite Elopak AS and SmartCraft ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elopak AS position performs unexpectedly, SmartCraft 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 SmartCraft ASA will offset losses from the drop in SmartCraft 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 |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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