Correlation Between Nordhealth and Sparebanken Ost
Can any of the company-specific risk be diversified away by investing in both Nordhealth and Sparebanken Ost 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 Nordhealth and Sparebanken Ost into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordhealth AS and Sparebanken Ost, you can compare the effects of market volatilities on Nordhealth and Sparebanken Ost 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 Nordhealth with a short position of Sparebanken Ost. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordhealth and Sparebanken Ost.
Diversification Opportunities for Nordhealth and Sparebanken Ost
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nordhealth and Sparebanken is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Nordhealth AS and Sparebanken Ost in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebanken Ost and Nordhealth 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 Nordhealth AS are associated (or correlated) with Sparebanken Ost. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebanken Ost has no effect on the direction of Nordhealth i.e., Nordhealth and Sparebanken Ost go up and down completely randomly.
Pair Corralation between Nordhealth and Sparebanken Ost
Assuming the 90 days trading horizon Nordhealth AS is expected to generate 3.36 times more return on investment than Sparebanken Ost. However, Nordhealth is 3.36 times more volatile than Sparebanken Ost. It trades about 0.05 of its potential returns per unit of risk. Sparebanken Ost is currently generating about 0.09 per unit of risk. If you would invest 2,000 in Nordhealth AS on August 24, 2024 and sell it today you would earn a total of 1,750 from holding Nordhealth AS or generate 87.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordhealth AS vs. Sparebanken Ost
Performance |
| Timeline |
| Nordhealth AS |
| Sparebanken Ost |
Nordhealth and Sparebanken Ost Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordhealth and Sparebanken Ost
The main advantage of trading using opposite Nordhealth and Sparebanken Ost positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordhealth position performs unexpectedly, Sparebanken Ost 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 Sparebanken Ost will offset losses from the drop in Sparebanken Ost's long position.The idea behind Nordhealth AS and Sparebanken Ost 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.| Sparebanken Ost vs. Sparebanken Mre | Sparebanken Ost vs. Sparebanken Sor | Sparebanken Ost vs. Sparebanken Vest | Sparebanken Ost vs. Nordic Halibut AS |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |