Correlation Between Integrated Wind and Elkem ASA
Can any of the company-specific risk be diversified away by investing in both Integrated Wind and Elkem 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 Integrated Wind and Elkem ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Integrated Wind Solutions and Elkem ASA, you can compare the effects of market volatilities on Integrated Wind and Elkem 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 Integrated Wind with a short position of Elkem ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integrated Wind and Elkem ASA.
Diversification Opportunities for Integrated Wind and Elkem ASA
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Integrated and Elkem is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Wind Solutions and Elkem ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elkem ASA and Integrated Wind 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 Integrated Wind Solutions are associated (or correlated) with Elkem ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elkem ASA has no effect on the direction of Integrated Wind i.e., Integrated Wind and Elkem ASA go up and down completely randomly.
Pair Corralation between Integrated Wind and Elkem ASA
Assuming the 90 days trading horizon Integrated Wind Solutions is expected to generate 1.04 times more return on investment than Elkem ASA. However, Integrated Wind is 1.04 times more volatile than Elkem ASA. It trades about -0.02 of its potential returns per unit of risk. Elkem ASA is currently generating about -0.1 per unit of risk. If you would invest 5,000 in Integrated Wind Solutions on August 28, 2024 and sell it today you would lose (120.00) from holding Integrated Wind Solutions or give up 2.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Integrated Wind Solutions vs. Elkem ASA
Performance |
| Timeline |
| Integrated Wind Solutions |
| Elkem ASA |
Integrated Wind and Elkem ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Integrated Wind and Elkem ASA
The main advantage of trading using opposite Integrated Wind and Elkem ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integrated Wind position performs unexpectedly, Elkem 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 Elkem ASA will offset losses from the drop in Elkem ASA's long position.| Integrated Wind vs. Aker Carbon Capture | Integrated Wind vs. Elkem ASA | Integrated Wind vs. Vow ASA | Integrated Wind vs. North Energy ASA |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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