Correlation Between Orkla ASA and Borregaard ASA
Can any of the company-specific risk be diversified away by investing in both Orkla ASA and Borregaard ASA 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 Orkla ASA and Borregaard ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orkla ASA and Borregaard ASA, you can compare the effects of market volatilities on Orkla ASA and Borregaard ASA 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 Orkla ASA with a short position of Borregaard ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orkla ASA and Borregaard ASA.
Diversification Opportunities for Orkla ASA and Borregaard ASA
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Orkla and Borregaard is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Orkla ASA and Borregaard ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borregaard ASA and Orkla 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 Orkla ASA are associated (or correlated) with Borregaard ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borregaard ASA has no effect on the direction of Orkla ASA i.e., Orkla ASA and Borregaard ASA go up and down completely randomly.
Pair Corralation between Orkla ASA and Borregaard ASA
Assuming the 90 days trading horizon Orkla ASA is expected to generate 0.77 times more return on investment than Borregaard ASA. However, Orkla ASA is 1.3 times less risky than Borregaard ASA. It trades about 0.09 of its potential returns per unit of risk. Borregaard ASA is currently generating about 0.03 per unit of risk. If you would invest 6,161 in Orkla ASA on August 25, 2024 and sell it today you would earn a total of 3,999 from holding Orkla ASA or generate 64.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orkla ASA vs. Borregaard ASA
Performance |
| Timeline |
| Orkla ASA |
| Borregaard ASA |
Orkla ASA and Borregaard ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orkla ASA and Borregaard ASA
The main advantage of trading using opposite Orkla ASA and Borregaard ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orkla ASA position performs unexpectedly, Borregaard ASA 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 Borregaard ASA will offset losses from the drop in Borregaard ASA's long position.| Orkla ASA vs. Grieg Seafood ASA | Orkla ASA vs. SalMar ASA | Orkla ASA vs. Pf Bakkafrost | Orkla ASA vs. Mowi ASA |
| Borregaard ASA vs. Veidekke ASA | Borregaard ASA vs. Orkla ASA | Borregaard ASA vs. Kongsberg Gruppen ASA | Borregaard ASA vs. Storebrand ASA |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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