Correlation Between Magnora ASA and Arendals Fossekompani
Can any of the company-specific risk be diversified away by investing in both Magnora ASA and Arendals Fossekompani 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 Magnora ASA and Arendals Fossekompani into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnora ASA and Arendals Fossekompani ASA, you can compare the effects of market volatilities on Magnora ASA and Arendals Fossekompani 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 Magnora ASA with a short position of Arendals Fossekompani. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnora ASA and Arendals Fossekompani.
Diversification Opportunities for Magnora ASA and Arendals Fossekompani
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magnora and Arendals is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Magnora ASA and Arendals Fossekompani ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arendals Fossekompani ASA and Magnora ASA 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 Magnora ASA are associated (or correlated) with Arendals Fossekompani. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arendals Fossekompani ASA has no effect on the direction of Magnora ASA i.e., Magnora ASA and Arendals Fossekompani go up and down completely randomly.
Pair Corralation between Magnora ASA and Arendals Fossekompani
Assuming the 90 days trading horizon Magnora ASA is expected to generate 1.02 times more return on investment than Arendals Fossekompani. However, Magnora ASA is 1.02 times more volatile than Arendals Fossekompani ASA. It trades about 0.05 of its potential returns per unit of risk. Arendals Fossekompani ASA is currently generating about -0.06 per unit of risk. If you would invest 2,190 in Magnora ASA on September 3, 2024 and sell it today you would earn a total of 315.00 from holding Magnora ASA or generate 14.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnora ASA vs. Arendals Fossekompani ASA
Performance |
| Timeline |
| Magnora ASA |
| Arendals Fossekompani ASA |
Magnora ASA and Arendals Fossekompani Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnora ASA and Arendals Fossekompani
The main advantage of trading using opposite Magnora ASA and Arendals Fossekompani positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnora ASA position performs unexpectedly, Arendals Fossekompani 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 Arendals Fossekompani will offset losses from the drop in Arendals Fossekompani's long position.| Magnora ASA vs. Aker Horizons AS | Magnora ASA vs. REC Silicon ASA | Magnora ASA vs. Vow ASA | Magnora ASA vs. Saga Pure 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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