Correlation Between Equinor ASA and Navamedic ASA
Can any of the company-specific risk be diversified away by investing in both Equinor ASA and Navamedic 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 Equinor ASA and Navamedic ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinor ASA and Navamedic ASA, you can compare the effects of market volatilities on Equinor ASA and Navamedic 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 Equinor ASA with a short position of Navamedic ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and Navamedic ASA.
Diversification Opportunities for Equinor ASA and Navamedic ASA
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Equinor and Navamedic is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA and Navamedic ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navamedic ASA and Equinor 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 Equinor ASA are associated (or correlated) with Navamedic ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navamedic ASA has no effect on the direction of Equinor ASA i.e., Equinor ASA and Navamedic ASA go up and down completely randomly.
Pair Corralation between Equinor ASA and Navamedic ASA
Assuming the 90 days trading horizon Equinor ASA is expected to generate 0.5 times more return on investment than Navamedic ASA. However, Equinor ASA is 2.02 times less risky than Navamedic ASA. It trades about 0.14 of its potential returns per unit of risk. Navamedic ASA is currently generating about 0.05 per unit of risk. If you would invest 25,281 in Equinor ASA on September 2, 2024 and sell it today you would earn a total of 1,439 from holding Equinor ASA or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinor ASA vs. Navamedic ASA
Performance |
| Timeline |
| Equinor ASA |
| Navamedic ASA |
Equinor ASA and Navamedic ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and Navamedic ASA
The main advantage of trading using opposite Equinor ASA and Navamedic ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, Navamedic 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 Navamedic ASA will offset losses from the drop in Navamedic ASA's long position.| Equinor ASA vs. DnB ASA | Equinor ASA vs. Mowi ASA | Equinor ASA vs. Yara International ASA | Equinor ASA vs. Telenor ASA |
| Navamedic ASA vs. DnB ASA | Navamedic ASA vs. Sparebank 1 SMN | Navamedic ASA vs. Norsk Hydro ASA | Navamedic ASA vs. Equinor 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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