Correlation Between Idex ASA and Atea ASA
Can any of the company-specific risk be diversified away by investing in both Idex ASA and Atea 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 Idex ASA and Atea ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Idex ASA and Atea ASA, you can compare the effects of market volatilities on Idex ASA and Atea 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 Idex ASA with a short position of Atea ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Idex ASA and Atea ASA.
Diversification Opportunities for Idex ASA and Atea ASA
Very weak diversification
The 3 months correlation between Idex and Atea is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Idex ASA and Atea ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atea ASA and Idex 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 Idex ASA are associated (or correlated) with Atea ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atea ASA has no effect on the direction of Idex ASA i.e., Idex ASA and Atea ASA go up and down completely randomly.
Pair Corralation between Idex ASA and Atea ASA
Assuming the 90 days trading horizon Idex ASA is expected to under-perform the Atea ASA. In addition to that, Idex ASA is 3.4 times more volatile than Atea ASA. It trades about -0.1 of its total potential returns per unit of risk. Atea ASA is currently generating about 0.04 per unit of volatility. If you would invest 10,564 in Atea ASA on September 3, 2024 and sell it today you would earn a total of 3,016 from holding Atea ASA or generate 28.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Idex ASA vs. Atea ASA
Performance |
| Timeline |
| Idex ASA |
| Atea ASA |
Idex ASA and Atea ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Idex ASA and Atea ASA
The main advantage of trading using opposite Idex ASA and Atea ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Idex ASA position performs unexpectedly, Atea 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 Atea ASA will offset losses from the drop in Atea ASA's long position.| Idex ASA vs. Next Biometrics Group | Idex ASA vs. Kongsberg Automotive Holding | Idex ASA vs. Bergenbio ASA | Idex ASA vs. XXL ASA |
| Atea ASA vs. Gjensidige Forsikring ASA | Atea ASA vs. Veidekke ASA | Atea ASA vs. Orkla ASA | Atea ASA vs. Aker 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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