Correlation Between Reach Subsea and Rana Gruber
Can any of the company-specific risk be diversified away by investing in both Reach Subsea and Rana Gruber 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 Reach Subsea and Rana Gruber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reach Subsea and Rana Gruber AS, you can compare the effects of market volatilities on Reach Subsea and Rana Gruber 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 Reach Subsea with a short position of Rana Gruber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reach Subsea and Rana Gruber.
Diversification Opportunities for Reach Subsea and Rana Gruber
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Reach and Rana is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Reach Subsea and Rana Gruber AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rana Gruber AS and Reach Subsea 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 Reach Subsea are associated (or correlated) with Rana Gruber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rana Gruber AS has no effect on the direction of Reach Subsea i.e., Reach Subsea and Rana Gruber go up and down completely randomly.
Pair Corralation between Reach Subsea and Rana Gruber
Assuming the 90 days trading horizon Reach Subsea is expected to under-perform the Rana Gruber. In addition to that, Reach Subsea is 1.72 times more volatile than Rana Gruber AS. It trades about -0.07 of its total potential returns per unit of risk. Rana Gruber AS is currently generating about 0.01 per unit of volatility. If you would invest 7,654 in Rana Gruber AS on September 1, 2024 and sell it today you would earn a total of 6.00 from holding Rana Gruber AS or generate 0.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Reach Subsea vs. Rana Gruber AS
Performance |
| Timeline |
| Reach Subsea |
| Rana Gruber AS |
Reach Subsea and Rana Gruber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reach Subsea and Rana Gruber
The main advantage of trading using opposite Reach Subsea and Rana Gruber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reach Subsea position performs unexpectedly, Rana Gruber 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 Rana Gruber will offset losses from the drop in Rana Gruber's long position.| Reach Subsea vs. BW Offshore | Reach Subsea vs. Eidesvik Offshore ASA | Reach Subsea vs. Solstad Offsho | Reach Subsea vs. Odfjell Drilling |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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