Correlation Between Rana Gruber and North Energy
Can any of the company-specific risk be diversified away by investing in both Rana Gruber and North Energy 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 Rana Gruber and North Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rana Gruber AS and North Energy ASA, you can compare the effects of market volatilities on Rana Gruber and North Energy 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 Rana Gruber with a short position of North Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rana Gruber and North Energy.
Diversification Opportunities for Rana Gruber and North Energy
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rana and North is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Rana Gruber AS and North Energy ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Energy ASA and Rana Gruber 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 Rana Gruber AS are associated (or correlated) with North Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Energy ASA has no effect on the direction of Rana Gruber i.e., Rana Gruber and North Energy go up and down completely randomly.
Pair Corralation between Rana Gruber and North Energy
Assuming the 90 days trading horizon Rana Gruber is expected to generate 5.94 times less return on investment than North Energy. But when comparing it to its historical volatility, Rana Gruber AS is 1.51 times less risky than North Energy. It trades about 0.02 of its potential returns per unit of risk. North Energy ASA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 234.00 in North Energy ASA on August 29, 2024 and sell it today you would earn a total of 36.00 from holding North Energy ASA or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rana Gruber AS vs. North Energy ASA
Performance |
| Timeline |
| Rana Gruber AS |
| North Energy ASA |
Rana Gruber and North Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rana Gruber and North Energy
The main advantage of trading using opposite Rana Gruber and North Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rana Gruber position performs unexpectedly, North Energy 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 North Energy will offset losses from the drop in North Energy's long position.| Rana Gruber vs. Green Minerals AS | Rana Gruber vs. Elkem ASA | Rana Gruber vs. Integrated Wind Solutions | Rana Gruber vs. Vow ASA |
| North Energy vs. Napatech AS | North Energy vs. Polaris Media | North Energy vs. Goodtech | North Energy vs. Grieg Seafood 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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