Correlation Between Melhus Sparebank and Napatech
Can any of the company-specific risk be diversified away by investing in both Melhus Sparebank and Napatech 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 Napatech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melhus Sparebank and Napatech AS, you can compare the effects of market volatilities on Melhus Sparebank and Napatech 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 Napatech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melhus Sparebank and Napatech.
Diversification Opportunities for Melhus Sparebank and Napatech
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Melhus and Napatech is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Melhus Sparebank and Napatech AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Napatech AS 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 Napatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Napatech AS has no effect on the direction of Melhus Sparebank i.e., Melhus Sparebank and Napatech go up and down completely randomly.
Pair Corralation between Melhus Sparebank and Napatech
Assuming the 90 days trading horizon Melhus Sparebank is expected to generate 0.41 times more return on investment than Napatech. However, Melhus Sparebank is 2.44 times less risky than Napatech. It trades about -0.03 of its potential returns per unit of risk. Napatech AS is currently generating about -0.31 per unit of risk. If you would invest 15,998 in Melhus Sparebank on September 1, 2024 and sell it today you would lose (98.00) from holding Melhus Sparebank or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melhus Sparebank vs. Napatech AS
Performance |
| Timeline |
| Melhus Sparebank |
| Napatech AS |
Melhus Sparebank and Napatech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melhus Sparebank and Napatech
The main advantage of trading using opposite Melhus Sparebank and Napatech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melhus Sparebank position performs unexpectedly, Napatech 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 Napatech will offset losses from the drop in Napatech's long position.| Melhus Sparebank vs. DnB ASA | Melhus Sparebank vs. Gjensidige Forsikring ASA | Melhus Sparebank vs. Orkla ASA | Melhus Sparebank vs. Telenor ASA |
| Napatech vs. Idex ASA | Napatech vs. Next Biometrics Group | Napatech vs. Polight ASA | Napatech vs. Kitron 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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