Correlation Between Sparebank and Electromagnetic Geoservices
Can any of the company-specific risk be diversified away by investing in both Sparebank and Electromagnetic Geoservices 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 Electromagnetic Geoservices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebank 1 Nord Norge and Electromagnetic Geoservices ASA, you can compare the effects of market volatilities on Sparebank and Electromagnetic Geoservices 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 Electromagnetic Geoservices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Electromagnetic Geoservices.
Diversification Opportunities for Sparebank and Electromagnetic Geoservices
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sparebank and Electromagnetic is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 Nord Norge and Electromagnetic Geoservices AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromagnetic Geoservices 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 Nord Norge are associated (or correlated) with Electromagnetic Geoservices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electromagnetic Geoservices has no effect on the direction of Sparebank i.e., Sparebank and Electromagnetic Geoservices go up and down completely randomly.
Pair Corralation between Sparebank and Electromagnetic Geoservices
Assuming the 90 days trading horizon Sparebank 1 Nord Norge is expected to generate 0.33 times more return on investment than Electromagnetic Geoservices. However, Sparebank 1 Nord Norge is 3.06 times less risky than Electromagnetic Geoservices. It trades about 0.23 of its potential returns per unit of risk. Electromagnetic Geoservices ASA is currently generating about -0.04 per unit of risk. If you would invest 10,900 in Sparebank 1 Nord Norge on September 13, 2024 and sell it today you would earn a total of 960.00 from holding Sparebank 1 Nord Norge or generate 8.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebank 1 Nord Norge vs. Electromagnetic Geoservices AS
Performance |
| Timeline |
| Sparebank 1 Nord |
| Electromagnetic Geoservices |
Sparebank and Electromagnetic Geoservices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Electromagnetic Geoservices
The main advantage of trading using opposite Sparebank and Electromagnetic Geoservices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Electromagnetic Geoservices 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 Electromagnetic Geoservices will offset losses from the drop in Electromagnetic Geoservices' long position.| Sparebank vs. Aurskog Sparebank | Sparebank vs. Helgeland Sparebank | Sparebank vs. Kongsberg Gruppen ASA | Sparebank vs. Napatech AS |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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