Correlation Between Masoval AS and Elkem ASA
Can any of the company-specific risk be diversified away by investing in both Masoval AS 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 Masoval AS and Elkem ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Masoval AS and Elkem ASA, you can compare the effects of market volatilities on Masoval AS 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 Masoval AS with a short position of Elkem ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masoval AS and Elkem ASA.
Diversification Opportunities for Masoval AS and Elkem ASA
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Masoval and Elkem is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Masoval AS and Elkem ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elkem ASA and Masoval AS 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 Masoval AS 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 Masoval AS i.e., Masoval AS and Elkem ASA go up and down completely randomly.
Pair Corralation between Masoval AS and Elkem ASA
Assuming the 90 days trading horizon Masoval AS is expected to generate 1.38 times more return on investment than Elkem ASA. However, Masoval AS is 1.38 times more volatile than Elkem ASA. It trades about 0.04 of its potential returns per unit of risk. Elkem ASA is currently generating about 0.05 per unit of risk. If you would invest 2,740 in Masoval AS on September 1, 2024 and sell it today you would earn a total of 40.00 from holding Masoval AS or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Masoval AS vs. Elkem ASA
Performance |
| Timeline |
| Masoval AS |
| Elkem ASA |
Masoval AS and Elkem ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Masoval AS and Elkem ASA
The main advantage of trading using opposite Masoval AS and Elkem ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masoval AS 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.| Masoval AS vs. Andfjord Salmon AS | Masoval AS vs. Elkem ASA | Masoval AS vs. Integrated Wind Solutions | Masoval AS vs. Vow 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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