Correlation Between Nel ASA and Otovo AS
Can any of the company-specific risk be diversified away by investing in both Nel ASA and Otovo AS 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 Nel ASA and Otovo AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nel ASA and Otovo AS, you can compare the effects of market volatilities on Nel ASA and Otovo AS 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 Nel ASA with a short position of Otovo AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nel ASA and Otovo AS.
Diversification Opportunities for Nel ASA and Otovo AS
Modest diversification
The 3 months correlation between Nel and Otovo is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Nel ASA and Otovo AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otovo AS and Nel 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 Nel ASA are associated (or correlated) with Otovo AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otovo AS has no effect on the direction of Nel ASA i.e., Nel ASA and Otovo AS go up and down completely randomly.
Pair Corralation between Nel ASA and Otovo AS
Assuming the 90 days trading horizon Nel ASA is expected to generate 0.77 times more return on investment than Otovo AS. However, Nel ASA is 1.3 times less risky than Otovo AS. It trades about -0.07 of its potential returns per unit of risk. Otovo AS is currently generating about -0.1 per unit of risk. If you would invest 1,549 in Nel ASA on September 3, 2024 and sell it today you would lose (1,254) from holding Nel ASA or give up 80.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nel ASA vs. Otovo AS
Performance |
| Timeline |
| Nel ASA |
| Otovo AS |
Nel ASA and Otovo AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nel ASA and Otovo AS
The main advantage of trading using opposite Nel ASA and Otovo AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nel ASA position performs unexpectedly, Otovo AS 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 Otovo AS will offset losses from the drop in Otovo AS's long position.The idea behind Nel ASA and Otovo AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Otovo AS vs. Sea1 Offshore | Otovo AS vs. Beerenberg AS | Otovo AS vs. Clean Seas Seafood | Otovo AS vs. Cloudberry Clean Energy |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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