Correlation Between Nel ASA and Saga Pure
Can any of the company-specific risk be diversified away by investing in both Nel ASA and Saga Pure 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 Saga Pure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nel ASA and Saga Pure ASA, you can compare the effects of market volatilities on Nel ASA and Saga Pure 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 Saga Pure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nel ASA and Saga Pure.
Diversification Opportunities for Nel ASA and Saga Pure
Poor diversification
The 3 months correlation between Nel and Saga is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Nel ASA and Saga Pure ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saga Pure ASA 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 Saga Pure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saga Pure ASA has no effect on the direction of Nel ASA i.e., Nel ASA and Saga Pure go up and down completely randomly.
Pair Corralation between Nel ASA and Saga Pure
Assuming the 90 days trading horizon Nel ASA is expected to under-perform the Saga Pure. In addition to that, Nel ASA is 10.35 times more volatile than Saga Pure ASA. It trades about -0.08 of its total potential returns per unit of risk. Saga Pure ASA is currently generating about -0.05 per unit of volatility. If you would invest 125.00 in Saga Pure ASA on November 4, 2024 and sell it today you would lose (1.00) from holding Saga Pure ASA or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nel ASA vs. Saga Pure ASA
Performance |
| Timeline |
| Nel ASA |
| Saga Pure ASA |
Nel ASA and Saga Pure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nel ASA and Saga Pure
The main advantage of trading using opposite Nel ASA and Saga Pure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nel ASA position performs unexpectedly, Saga Pure 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 Saga Pure will offset losses from the drop in Saga Pure's long position.The idea behind Nel ASA and Saga Pure ASA 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.| Saga Pure vs. Aker Horizons AS | Saga Pure vs. REC Silicon ASA | Saga Pure vs. Kongsberg Automotive Holding | Saga Pure vs. Aker Carbon Capture |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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