Correlation Between Orkla ASA and Tomra Systems
Can any of the company-specific risk be diversified away by investing in both Orkla ASA and Tomra Systems 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 Tomra Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orkla ASA and Tomra Systems ASA, you can compare the effects of market volatilities on Orkla ASA and Tomra Systems 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 Tomra Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orkla ASA and Tomra Systems.
Diversification Opportunities for Orkla ASA and Tomra Systems
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Orkla and Tomra is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Orkla ASA and Tomra Systems ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tomra Systems 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 Tomra Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tomra Systems ASA has no effect on the direction of Orkla ASA i.e., Orkla ASA and Tomra Systems go up and down completely randomly.
Pair Corralation between Orkla ASA and Tomra Systems
Assuming the 90 days trading horizon Orkla ASA is expected to generate 0.35 times more return on investment than Tomra Systems. However, Orkla ASA is 2.84 times less risky than Tomra Systems. It trades about 0.01 of its potential returns per unit of risk. Tomra Systems ASA is currently generating about 0.0 per unit of risk. If you would invest 10,170 in Orkla ASA on September 1, 2024 and sell it today you would earn a total of 20.00 from holding Orkla ASA or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Orkla ASA vs. Tomra Systems ASA
Performance |
| Timeline |
| Orkla ASA |
| Tomra Systems ASA |
Orkla ASA and Tomra Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orkla ASA and Tomra Systems
The main advantage of trading using opposite Orkla ASA and Tomra Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orkla ASA position performs unexpectedly, Tomra Systems 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 Tomra Systems will offset losses from the drop in Tomra Systems' long position.The idea behind Orkla ASA and Tomra Systems ASA 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.| Tomra Systems vs. Orkla ASA | Tomra Systems vs. Telenor ASA | Tomra Systems vs. Yara International ASA | Tomra Systems vs. SalMar 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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