Correlation Between REC Silicon and Eqva ASA
Can any of the company-specific risk be diversified away by investing in both REC Silicon and Eqva 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 REC Silicon and Eqva ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REC Silicon ASA and Eqva ASA, you can compare the effects of market volatilities on REC Silicon and Eqva 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 REC Silicon with a short position of Eqva ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of REC Silicon and Eqva ASA.
Diversification Opportunities for REC Silicon and Eqva ASA
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between REC and Eqva is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding REC Silicon ASA and Eqva ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eqva ASA and REC Silicon 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 REC Silicon ASA are associated (or correlated) with Eqva ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eqva ASA has no effect on the direction of REC Silicon i.e., REC Silicon and Eqva ASA go up and down completely randomly.
Pair Corralation between REC Silicon and Eqva ASA
Assuming the 90 days trading horizon REC Silicon ASA is expected to under-perform the Eqva ASA. In addition to that, REC Silicon is 2.37 times more volatile than Eqva ASA. It trades about -0.3 of its total potential returns per unit of risk. Eqva ASA is currently generating about 0.13 per unit of volatility. If you would invest 445.00 in Eqva ASA on September 1, 2024 and sell it today you would earn a total of 43.00 from holding Eqva ASA or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
REC Silicon ASA vs. Eqva ASA
Performance |
| Timeline |
| REC Silicon ASA |
| Eqva ASA |
REC Silicon and Eqva ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REC Silicon and Eqva ASA
The main advantage of trading using opposite REC Silicon and Eqva ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REC Silicon position performs unexpectedly, Eqva 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 Eqva ASA will offset losses from the drop in Eqva ASA's long position.| REC Silicon vs. Aker Horizons AS | REC Silicon vs. MPC Container Ships | REC Silicon vs. Aker Carbon Capture | REC Silicon vs. Nordic Semiconductor 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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