Correlation Between Observe Medical and Sparebank
Can any of the company-specific risk be diversified away by investing in both Observe Medical and Sparebank 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 Observe Medical and Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Observe Medical Asa and Sparebank 1 SR, you can compare the effects of market volatilities on Observe Medical and Sparebank 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 Observe Medical with a short position of Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Observe Medical and Sparebank.
Diversification Opportunities for Observe Medical and Sparebank
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Observe and Sparebank is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Observe Medical Asa and Sparebank 1 SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SR and Observe Medical 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 Observe Medical Asa are associated (or correlated) with Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SR has no effect on the direction of Observe Medical i.e., Observe Medical and Sparebank go up and down completely randomly.
Pair Corralation between Observe Medical and Sparebank
Assuming the 90 days trading horizon Observe Medical Asa is expected to generate 7.04 times more return on investment than Sparebank. However, Observe Medical is 7.04 times more volatile than Sparebank 1 SR. It trades about 0.09 of its potential returns per unit of risk. Sparebank 1 SR is currently generating about -0.02 per unit of risk. If you would invest 35.00 in Observe Medical Asa on September 5, 2024 and sell it today you would earn a total of 4.00 from holding Observe Medical Asa or generate 11.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Observe Medical Asa vs. Sparebank 1 SR
Performance |
| Timeline |
| Observe Medical Asa |
| Sparebank 1 SR |
Observe Medical and Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Observe Medical and Sparebank
The main advantage of trading using opposite Observe Medical and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Observe Medical position performs unexpectedly, Sparebank 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 Sparebank will offset losses from the drop in Sparebank's long position.| Observe Medical vs. Sparebank 1 SR | Observe Medical vs. Veidekke ASA | Observe Medical vs. Sogn Sparebank | Observe Medical vs. Romsdal Sparebank |
| Sparebank vs. Holand og Setskog | Sparebank vs. Helgeland Sparebank | Sparebank vs. Elkem ASA | Sparebank vs. Integrated Wind Solutions |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |