Correlation Between Orkla ASA and Melhus Sparebank
Can any of the company-specific risk be diversified away by investing in both Orkla ASA and Melhus 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 Orkla ASA and Melhus Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orkla ASA and Melhus Sparebank, you can compare the effects of market volatilities on Orkla ASA and Melhus 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 Orkla ASA with a short position of Melhus Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orkla ASA and Melhus Sparebank.
Diversification Opportunities for Orkla ASA and Melhus Sparebank
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Orkla and Melhus is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Orkla ASA and Melhus Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melhus Sparebank 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 Melhus Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melhus Sparebank has no effect on the direction of Orkla ASA i.e., Orkla ASA and Melhus Sparebank go up and down completely randomly.
Pair Corralation between Orkla ASA and Melhus Sparebank
Assuming the 90 days trading horizon Orkla ASA is expected to generate 1.13 times more return on investment than Melhus Sparebank. However, Orkla ASA is 1.13 times more volatile than Melhus Sparebank. It trades about 0.09 of its potential returns per unit of risk. Melhus Sparebank is currently generating about 0.04 per unit of risk. If you would invest 6,303 in Orkla ASA on September 3, 2024 and sell it today you would earn a total of 3,887 from holding Orkla ASA or generate 61.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orkla ASA vs. Melhus Sparebank
Performance |
| Timeline |
| Orkla ASA |
| Melhus Sparebank |
Orkla ASA and Melhus Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orkla ASA and Melhus Sparebank
The main advantage of trading using opposite Orkla ASA and Melhus Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orkla ASA position performs unexpectedly, Melhus 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 Melhus Sparebank will offset losses from the drop in Melhus Sparebank's long position.| Orkla ASA vs. Telenor ASA | Orkla ASA vs. DnB ASA | Orkla ASA vs. Yara International ASA | Orkla ASA vs. Storebrand ASA |
| Melhus Sparebank vs. Sparebank 1 Nord Norge | Melhus Sparebank vs. Aurskog Sparebank | Melhus Sparebank vs. Helgeland Sparebank |
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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