Correlation Between Entra ASA and Veidekke ASA
Can any of the company-specific risk be diversified away by investing in both Entra ASA and Veidekke 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 Entra ASA and Veidekke ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entra ASA and Veidekke ASA, you can compare the effects of market volatilities on Entra ASA and Veidekke 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 Entra ASA with a short position of Veidekke ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entra ASA and Veidekke ASA.
Diversification Opportunities for Entra ASA and Veidekke ASA
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Entra and Veidekke is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Entra ASA and Veidekke ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veidekke ASA and Entra 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 Entra ASA are associated (or correlated) with Veidekke ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veidekke ASA has no effect on the direction of Entra ASA i.e., Entra ASA and Veidekke ASA go up and down completely randomly.
Pair Corralation between Entra ASA and Veidekke ASA
Assuming the 90 days trading horizon Entra ASA is expected to generate 2.72 times less return on investment than Veidekke ASA. In addition to that, Entra ASA is 1.42 times more volatile than Veidekke ASA. It trades about 0.02 of its total potential returns per unit of risk. Veidekke ASA is currently generating about 0.08 per unit of volatility. If you would invest 8,522 in Veidekke ASA on September 3, 2024 and sell it today you would earn a total of 5,138 from holding Veidekke ASA or generate 60.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entra ASA vs. Veidekke ASA
Performance |
| Timeline |
| Entra ASA |
| Veidekke ASA |
Entra ASA and Veidekke ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entra ASA and Veidekke ASA
The main advantage of trading using opposite Entra ASA and Veidekke ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entra ASA position performs unexpectedly, Veidekke 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 Veidekke ASA will offset losses from the drop in Veidekke ASA's long position.| Entra ASA vs. Gjensidige Forsikring ASA | Entra ASA vs. Storebrand ASA | Entra ASA vs. Olav Thon Eien | Entra ASA vs. DnB 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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