Correlation Between Helgeland Sparebank and Sea1 Offshore

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Can any of the company-specific risk be diversified away by investing in both Helgeland Sparebank and Sea1 Offshore 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 Helgeland Sparebank and Sea1 Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Helgeland Sparebank and Sea1 Offshore, you can compare the effects of market volatilities on Helgeland Sparebank and Sea1 Offshore 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 Helgeland Sparebank with a short position of Sea1 Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Helgeland Sparebank and Sea1 Offshore.

Diversification Opportunities for Helgeland Sparebank and Sea1 Offshore

-0.52
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Helgeland and Sea1 is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Helgeland Sparebank and Sea1 Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea1 Offshore and Helgeland Sparebank 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 Helgeland Sparebank are associated (or correlated) with Sea1 Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea1 Offshore has no effect on the direction of Helgeland Sparebank i.e., Helgeland Sparebank and Sea1 Offshore go up and down completely randomly.

Pair Corralation between Helgeland Sparebank and Sea1 Offshore

Assuming the 90 days trading horizon Helgeland Sparebank is expected to generate 26.41 times less return on investment than Sea1 Offshore. But when comparing it to its historical volatility, Helgeland Sparebank is 1.59 times less risky than Sea1 Offshore. It trades about 0.02 of its potential returns per unit of risk. Sea1 Offshore is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  2,560  in Sea1 Offshore on August 29, 2024 and sell it today you would earn a total of  370.00  from holding Sea1 Offshore or generate 14.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Helgeland Sparebank  vs.  Sea1 Offshore

 Performance 
       Timeline  
Helgeland Sparebank 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Helgeland Sparebank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Helgeland Sparebank may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Sea1 Offshore 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sea1 Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Sea1 Offshore is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Helgeland Sparebank and Sea1 Offshore Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Helgeland Sparebank and Sea1 Offshore

The main advantage of trading using opposite Helgeland Sparebank and Sea1 Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Helgeland Sparebank position performs unexpectedly, Sea1 Offshore 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 Sea1 Offshore will offset losses from the drop in Sea1 Offshore's long position.
The idea behind Helgeland Sparebank and Sea1 Offshore pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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