Correlation Between Lea Bank and Circa Group
Can any of the company-specific risk be diversified away by investing in both Lea Bank and Circa Group 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 Lea Bank and Circa Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lea Bank ASA and Circa Group AS, you can compare the effects of market volatilities on Lea Bank and Circa Group 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 Lea Bank with a short position of Circa Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lea Bank and Circa Group.
Diversification Opportunities for Lea Bank and Circa Group
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lea and Circa is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Lea Bank ASA and Circa Group AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Circa Group AS and Lea Bank 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 Lea Bank ASA are associated (or correlated) with Circa Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Circa Group AS has no effect on the direction of Lea Bank i.e., Lea Bank and Circa Group go up and down completely randomly.
Pair Corralation between Lea Bank and Circa Group
Assuming the 90 days trading horizon Lea Bank is expected to generate 1.48 times less return on investment than Circa Group. But when comparing it to its historical volatility, Lea Bank ASA is 1.28 times less risky than Circa Group. It trades about 0.16 of its potential returns per unit of risk. Circa Group AS is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 43.00 in Circa Group AS on September 12, 2024 and sell it today you would earn a total of 21.00 from holding Circa Group AS or generate 48.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lea Bank ASA vs. Circa Group AS
Performance |
| Timeline |
| Lea Bank ASA |
| Circa Group AS |
Lea Bank and Circa Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lea Bank and Circa Group
The main advantage of trading using opposite Lea Bank and Circa Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lea Bank position performs unexpectedly, Circa Group 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 Circa Group will offset losses from the drop in Circa Group's long position.| Lea Bank vs. Norwegian Air Shuttle | Lea Bank vs. Clean Seas Seafood | Lea Bank vs. Pareto Bank ASA | Lea Bank vs. Sparebanken Ost |
| Circa Group vs. Morrow Bank ASA | Circa Group vs. Lery Seafood Group | Circa Group vs. Romerike Sparebank | Circa Group vs. Nordhealth AS |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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