Correlation Between Romsdal Sparebank and Aasen Sparebank
Can any of the company-specific risk be diversified away by investing in both Romsdal Sparebank and Aasen 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 Romsdal Sparebank and Aasen Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Romsdal Sparebank and Aasen Sparebank, you can compare the effects of market volatilities on Romsdal Sparebank and Aasen 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 Romsdal Sparebank with a short position of Aasen Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Romsdal Sparebank and Aasen Sparebank.
Diversification Opportunities for Romsdal Sparebank and Aasen Sparebank
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Romsdal and Aasen is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Romsdal Sparebank and Aasen Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aasen Sparebank and Romsdal Sparebank 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 Romsdal Sparebank are associated (or correlated) with Aasen Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aasen Sparebank has no effect on the direction of Romsdal Sparebank i.e., Romsdal Sparebank and Aasen Sparebank go up and down completely randomly.
Pair Corralation between Romsdal Sparebank and Aasen Sparebank
Assuming the 90 days trading horizon Romsdal Sparebank is expected to generate 1.71 times less return on investment than Aasen Sparebank. But when comparing it to its historical volatility, Romsdal Sparebank is 1.15 times less risky than Aasen Sparebank. It trades about 0.02 of its potential returns per unit of risk. Aasen Sparebank is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,011 in Aasen Sparebank on August 28, 2024 and sell it today you would earn a total of 2,287 from holding Aasen Sparebank or generate 22.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Romsdal Sparebank vs. Aasen Sparebank
Performance |
| Timeline |
| Romsdal Sparebank |
| Aasen Sparebank |
Romsdal Sparebank and Aasen Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Romsdal Sparebank and Aasen Sparebank
The main advantage of trading using opposite Romsdal Sparebank and Aasen Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Romsdal Sparebank position performs unexpectedly, Aasen 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 Aasen Sparebank will offset losses from the drop in Aasen Sparebank's long position.| Romsdal Sparebank vs. Elkem ASA | Romsdal Sparebank vs. Integrated Wind Solutions | Romsdal Sparebank vs. Vow ASA | Romsdal Sparebank vs. North Energy ASA |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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