Correlation Between Melhus Sparebank and Medistim ASA
Can any of the company-specific risk be diversified away by investing in both Melhus Sparebank and Medistim 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 Melhus Sparebank and Medistim ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melhus Sparebank and Medistim ASA, you can compare the effects of market volatilities on Melhus Sparebank and Medistim 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 Melhus Sparebank with a short position of Medistim ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melhus Sparebank and Medistim ASA.
Diversification Opportunities for Melhus Sparebank and Medistim ASA
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Melhus and Medistim is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Melhus Sparebank and Medistim ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medistim ASA and Melhus 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 Melhus Sparebank are associated (or correlated) with Medistim ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medistim ASA has no effect on the direction of Melhus Sparebank i.e., Melhus Sparebank and Medistim ASA go up and down completely randomly.
Pair Corralation between Melhus Sparebank and Medistim ASA
Assuming the 90 days trading horizon Melhus Sparebank is expected to generate 0.42 times more return on investment than Medistim ASA. However, Melhus Sparebank is 2.38 times less risky than Medistim ASA. It trades about 0.03 of its potential returns per unit of risk. Medistim ASA is currently generating about -0.02 per unit of risk. If you would invest 14,417 in Melhus Sparebank on September 1, 2024 and sell it today you would earn a total of 1,483 from holding Melhus Sparebank or generate 10.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Melhus Sparebank vs. Medistim ASA
Performance |
| Timeline |
| Melhus Sparebank |
| Medistim ASA |
Melhus Sparebank and Medistim ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melhus Sparebank and Medistim ASA
The main advantage of trading using opposite Melhus Sparebank and Medistim ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melhus Sparebank position performs unexpectedly, Medistim 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 Medistim ASA will offset losses from the drop in Medistim ASA's long position.| Melhus Sparebank vs. DnB ASA | Melhus Sparebank vs. Gjensidige Forsikring ASA | Melhus Sparebank vs. Orkla ASA | Melhus Sparebank vs. Telenor ASA |
| Medistim ASA vs. Lifecare AS | Medistim ASA vs. Elkem ASA | Medistim ASA vs. Integrated Wind Solutions | Medistim ASA vs. Vow 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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