Correlation Between Okea ASA and SpareBank
Can any of the company-specific risk be diversified away by investing in both Okea ASA 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 Okea ASA and SpareBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okea ASA and SpareBank 1 stlandet, you can compare the effects of market volatilities on Okea ASA 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 Okea ASA with a short position of SpareBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okea ASA and SpareBank.
Diversification Opportunities for Okea ASA and SpareBank
Very good diversification
The 3 months correlation between Okea and SpareBank is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Okea ASA and SpareBank 1 stlandet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpareBank 1 stlandet and Okea 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 Okea 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 stlandet has no effect on the direction of Okea ASA i.e., Okea ASA and SpareBank go up and down completely randomly.
Pair Corralation between Okea ASA and SpareBank
Assuming the 90 days trading horizon Okea ASA is expected to under-perform the SpareBank. In addition to that, Okea ASA is 1.83 times more volatile than SpareBank 1 stlandet. It trades about -0.03 of its total potential returns per unit of risk. SpareBank 1 stlandet is currently generating about 0.07 per unit of volatility. If you would invest 10,540 in SpareBank 1 stlandet on September 14, 2024 and sell it today you would earn a total of 4,740 from holding SpareBank 1 stlandet or generate 44.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okea ASA vs. SpareBank 1 stlandet
Performance |
| Timeline |
| Okea ASA |
| SpareBank 1 stlandet |
Okea ASA and SpareBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okea ASA and SpareBank
The main advantage of trading using opposite Okea ASA and SpareBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okea ASA 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.The idea behind Okea ASA and SpareBank 1 stlandet 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.| SpareBank vs. Kongsberg Gruppen ASA | SpareBank vs. Napatech AS | SpareBank vs. Elkem ASA | SpareBank vs. Scatec Solar OL |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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