Correlation Between Sparebank and Navamedic ASA
Can any of the company-specific risk be diversified away by investing in both Sparebank and Navamedic 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 Sparebank and Navamedic ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebank 1 SMN and Navamedic ASA, you can compare the effects of market volatilities on Sparebank and Navamedic 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 Sparebank with a short position of Navamedic ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Navamedic ASA.
Diversification Opportunities for Sparebank and Navamedic ASA
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sparebank and Navamedic is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SMN and Navamedic ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navamedic ASA and 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 Sparebank 1 SMN are associated (or correlated) with Navamedic ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navamedic ASA has no effect on the direction of Sparebank i.e., Sparebank and Navamedic ASA go up and down completely randomly.
Pair Corralation between Sparebank and Navamedic ASA
Assuming the 90 days trading horizon Sparebank 1 SMN is expected to generate 0.53 times more return on investment than Navamedic ASA. However, Sparebank 1 SMN is 1.87 times less risky than Navamedic ASA. It trades about 0.09 of its potential returns per unit of risk. Navamedic ASA is currently generating about -0.04 per unit of risk. If you would invest 12,324 in Sparebank 1 SMN on September 4, 2024 and sell it today you would earn a total of 3,940 from holding Sparebank 1 SMN or generate 31.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebank 1 SMN vs. Navamedic ASA
Performance |
| Timeline |
| Sparebank 1 SMN |
| Navamedic ASA |
Sparebank and Navamedic ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Navamedic ASA
The main advantage of trading using opposite Sparebank and Navamedic ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Navamedic 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 Navamedic ASA will offset losses from the drop in Navamedic ASA's long position.| Sparebank vs. Sparebank 1 Nord Norge | Sparebank vs. Sparebanken Vest | Sparebank vs. Storebrand ASA | Sparebank vs. DnB ASA |
| Navamedic ASA vs. Photocure | Navamedic ASA vs. Medistim ASA | Navamedic ASA vs. PCI Biotech Holding | Navamedic ASA 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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