Correlation Between Goodtech and Techstep ASA
Can any of the company-specific risk be diversified away by investing in both Goodtech and Techstep 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 Goodtech and Techstep ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goodtech and Techstep ASA, you can compare the effects of market volatilities on Goodtech and Techstep 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 Goodtech with a short position of Techstep ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodtech and Techstep ASA.
Diversification Opportunities for Goodtech and Techstep ASA
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Goodtech and Techstep is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Goodtech and Techstep ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techstep ASA and Goodtech 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 Goodtech are associated (or correlated) with Techstep ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techstep ASA has no effect on the direction of Goodtech i.e., Goodtech and Techstep ASA go up and down completely randomly.
Pair Corralation between Goodtech and Techstep ASA
Assuming the 90 days trading horizon Goodtech is expected to generate 0.58 times more return on investment than Techstep ASA. However, Goodtech is 1.71 times less risky than Techstep ASA. It trades about -0.04 of its potential returns per unit of risk. Techstep ASA is currently generating about -0.07 per unit of risk. If you would invest 1,030 in Goodtech on October 24, 2024 and sell it today you would lose (15.00) from holding Goodtech or give up 1.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goodtech vs. Techstep ASA
Performance |
| Timeline |
| Goodtech |
| Techstep ASA |
Goodtech and Techstep ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodtech and Techstep ASA
The main advantage of trading using opposite Goodtech and Techstep ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodtech position performs unexpectedly, Techstep 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 Techstep ASA will offset losses from the drop in Techstep ASA's long position.| Goodtech vs. Eidesvik Offshore ASA | Goodtech vs. Borgestad A | Goodtech vs. Kitron ASA | Goodtech vs. Havila Shipping ASA |
| Techstep ASA vs. Next Biometrics Group | Techstep ASA vs. Zalaris ASA | Techstep ASA vs. NRC Group ASA | Techstep ASA vs. Goodtech |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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