Correlation Between North Energy and Masoval AS
Can any of the company-specific risk be diversified away by investing in both North Energy and Masoval 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 North Energy and Masoval AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Energy ASA and Masoval AS, you can compare the effects of market volatilities on North Energy and Masoval 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 North Energy with a short position of Masoval AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Energy and Masoval AS.
Diversification Opportunities for North Energy and Masoval AS
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between North and Masoval is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding North Energy ASA and Masoval AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masoval AS and North Energy 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 North Energy ASA are associated (or correlated) with Masoval AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masoval AS has no effect on the direction of North Energy i.e., North Energy and Masoval AS go up and down completely randomly.
Pair Corralation between North Energy and Masoval AS
Assuming the 90 days trading horizon North Energy ASA is expected to generate 0.68 times more return on investment than Masoval AS. However, North Energy ASA is 1.46 times less risky than Masoval AS. It trades about 0.11 of its potential returns per unit of risk. Masoval AS is currently generating about -0.11 per unit of risk. If you would invest 260.00 in North Energy ASA on August 29, 2024 and sell it today you would earn a total of 10.00 from holding North Energy ASA or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
North Energy ASA vs. Masoval AS
Performance |
| Timeline |
| North Energy ASA |
| Masoval AS |
North Energy and Masoval AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Energy and Masoval AS
The main advantage of trading using opposite North Energy and Masoval AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Energy position performs unexpectedly, Masoval 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 Masoval AS will offset losses from the drop in Masoval AS's long position.| North Energy vs. Bien Sparebank ASA | North Energy vs. Aurskog Sparebank | North Energy vs. Proximar Seafood AS | North Energy vs. Grong Sparebank |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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